Orders for durable goods manufactured by U.S. companies rose more than expected in January but the gain was due entirely to the aerospace industry.
The Commerce Department said orders rose 1.8% after two months of declines, topping economists’ expectations of a 1.7% increase amid a 69.6% jump in orders for commercial aircraft and a 59.9% rise in orders for military aircraft.
Excluding the volatile transportation category, durable goods orders actually fell 0.2%, the weakest showing since June. Business investment also got off to a poor start to 2017, with core capital-goods orders dropping 0.4% in January — the first decline in four months.
But as MarketWatch reports, “Core investment has risen 2.4% in the past three months, a marked contrast to a decline as recently as last summer. And the prospect for more investment later on the year is higher if some of [President] Trump’s policies are put into place.”
The Trump administration has promised to cut corporate taxes, reduce regulations and take other steps to help businesses but uncertainty over what kind of policies will emerge from Washington might partly deter businesses from proceeding with some investments early in the year, economists say.
“My view on business investment remains that there is a good deal of pent-up energy that had been held back by an adverse and uncertain policy environment,” Stephen Stanley, chief economist of Amherst Pierpont Securities, told MarketWatch.
In January, orders fell for computers, networking gear, electrical equipment and primary metals used to make a variety of heavy-duty goods for businesses and consumers.
“Manufacturing firms have struggled since 2015 with a rising value of the dollar, which makes exports more expensive,” The Associated Press noted. “In addition, a plunge in oil prices triggered sharp cutbacks in investment spending at energy companies.”
“However, in recent months the dollar has stabilized and oil prices have resumed rising, developments that are expected to benefit exports and domestic investment,” the AP added.