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Orders for US durable goods up 2.8 percent in January with strength in business investment

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WASHINGTON — Orders to U.S. factories for long-lasting manufactured goods rebounded in January, rising by the largest amount in six months, although much of the strength came from a big jump in airplane orders. A key category that signals business investment plans did manage a small gain.

Orders for durable goods increased 2.8 percent in January, the biggest increase since July. Orders were down 3.7 percent in December and 2.2 percent in November, the Commerce Department reported Thursday.

Demand in a category that serves as a proxy for business investment increased 0.6 percent in January. It was a small gain but it came after four consecutive declines including decreases of 0.7 percent in December and 0.5 percent in November.

The 2.8 percent rebound in total orders was larger than had been expected but it was heavily influenced by a surge in demand in the volatile category of commercial aircraft, which soared 128.5 percent in January after having fallen 58.3 percent in December.

Excluding transportation, orders showed a more modest gain of 0.3 percent in January after declines in December and November.

PHOTO: In this Oct. 22, 2014 photo, workers perform final inspections on 2015 Ford Explorers on the assembly line at the Chicago Ford Assembly Plant in Chicago. The Commerce Department releases its January report on durable goods on Thursday, Feb. 26, 2015. (AP Photo/M. Spencer Green)
In this Oct. 22, 2014 photo, workers perform final inspections on 2015 Ford Explorers on the assembly line at the Chicago Ford Assembly Plant in Chicago. The Commerce Department releases its January report on durable goods on Thursday, Feb. 26, 2015. (AP Photo/M. Spencer Green)

The stronger U.S. dollar and global weakness have hurt exports but economists are still optimistic that surging domestic demand will result in a sustained rebound in orders this year.

Jennifer Lee, senior economist at BMO Capital Markets, said that orders should begin to increase as the supply backlogs caused by the West Coast port dispute start to clear.

For January, demand for machinery showed an increase of 1.9 percent while demand for computers was up 7.4 percent.

The government is scheduled to revise its estimate for economic growth for the October-December quarter on Friday. Analysts are expecting that the initial 2.6 percent estimated growth rate for the fourth quarter will be revised down to 2.1 percent.

However, they are looking for a rebound in the first quarter to around 2.5 percent.

Delivering the Fed's twice-a-year report on the economy to Congress this week, Fed Chair Janet Yellen struck an upbeat note, saying that the Fed is looking for strong employment gains to help lift economic activity in 2015.

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