New orders for key U.S.-made capital goods dropped by the most in eight months i...
WASHINGTON - New orders for key U.S.-made capital goods dropped by the most in eight months in December and shipments were weak, suggesting business investment contracted further in the fourth quarter and was a drag on economic growth.
They are expected to reiterate the Fed’s desire to keep rates unchanged at least through this year. Weak business investment and the resulting slump in manufacturing have been on the radar of Fed officials who have blamed trade tensions, especially the White House’s 18-month trade war with China, and an uncertain global economic growth outlook for the malaise.
That was the largest decrease since April. Data for November was revised lower to show these so-called core capital goods orders edging up 0.1% instead of gaining 0.2% as previously reported. Economists polled by Reuters had forecast core capital goods would be unchanged in December. The government will publish its snapshot of fourth-quarter GDP on Thursday. Business investment had been weighed down by steep declines in both spending on equipment and nonresidential structures such as gas and oil well drilling.
Economists estimate the production suspension could slice at least half a percentage point from first-quarter GDP growth. The hit to GDP growth would come from a smaller inventory build. Though airlines have continued to submit orders there have been no deliveries, leading to a rise in inventories at factories.
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