U.S. durable-goods orders jump 5.6% — but the details paint a more dismal picture

The numbers: Orders for manufactured goods jumped 5.6% in December because of a flush of new contracts for Boeing passenger planes, but business investment was weak again in another sign of a corroding U.S. economy.

If transportation is set aside, new orders fell 0.1% last month. What’s more, a key measure of business investment also declined for the second time in four months.

Economists polled by the Wall Street Journal had forecast a 2.4% increase in orders for durable goods. These are products like cars and computers meant to last at least three years.

Orders rise in an expanding economy and shrink when growth weakens.

Key details: Orders for aircraft leaped 116%, more than offsetting a 31% decline in November. Boeing took in 250 orders after a gain of just 21 in the prior month.

These sorts of swings are common in the industry at the end of the year.

Demand for new cars and trucks rose less than 1%.

The transportation segment is a large and volatile category that often exaggerates the ups and downs in industrial production.

Outside of transportation, new orders declined for the second time in four months and only the third time since 2021. Bookings fell in most other major categories.

Business investment, meanwhile, also slipped 0.2% to mark the third drop in four months. The annual rate of growth has slowed sharply in recent months to 5.2% from as high as 11% one year earlier.

These orders exclude military spending and the auto and aerospace industries.

Big picture: By some measures, U.S. manufacturers are already in recession territory. They’ve reduced production in response to a slowdown in new orders and might make further cutbacks if the economy continues to soften.

Rising interest rates are a chief source of the recent weakness. Higher borrowing costs discourage consumers from spending and businesses from investing.

Households have also shifted their spending more toward services such as recreation and away from goods like consumer electronics.

The outlook isn’t expected to improve much — if at all — early in the new year.

Read: U.S. GDP grew faster than expected in final quarter of 2023 — but don’t expect a repeat

Looking ahead: “Economic data at the end of 2022 struck a negative tone, meaning the economy entered 2023 with weak momentum,” said Oren Klachkin, lead U.S. economist at Oxford Economics.  

Market reaction: The Dow Jones Industrial Average
DJIA,
+0.45%
and S&P 500
SPX,
+0.74%
were set to open higher in Thursday trades.

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