US durable goods orders rise 4.6 pct. on aircraft

WASHINGTON (AP) ? U.S. demand for long-lasting manufactured goods rose sharply in December, helped by a strong gain in volatile aircraft orders. But companies slowed orders for computers and other goods that signal investment plans, indicating manufacturing could stay weak in 2013.

The Commerce Department said Monday that overall orders for durable goods increased 4.6 percent in December compared with November. The gains were led by a 56.4 percent increase in military aircraft orders and a 10.1 percent increase in commercial aircraft orders.

Orders for machinery, communications equipment and primary metals such as steel also showed increases.

Still, demand for core capital goods, a measure of business investment plans, rose just 0.2 percent. That followed two straight monthly gains of 3 percent.

Orders for durable goods, which are expected to last at least three years, can fluctuate from month to month. For all of 2012, durable goods orders rose 4.1 percent. But demand for core capital goods fell 0.3 percent for the year.

Slower growth in business orders has hurt manufacturing, which struggled to gain momentum in 2012. While orders for durable goods rebounded in the final months of last year, economists expect the overall trend to stay weak this year.

"The strength in durable goods orders for December is a most welcome development," said Dan Greenhaus, an analyst at BTIG. "Going forward though, despite the better numbers, we still expect business investment ... to slow yet again in 2013. This is a trend that remains in place given the weaker demand environment."

Paul Ashworth, chief U.S. economist at Capital Economics, said the growth rate of business investment in equipment and software in the October-December quarter should come in close to 5 percent, an encouraging sign.

Ashworth, however, is worried about an increase in Social Security payroll taxes, which hit Americans in January and is expected to slow consumer spending at the start of the year. That could make businesses nervous and further slow economic growth.

The economy grew at an annual rate of 3.1 percent in the April-June quarter. The government will provide its first look at overall economic growth in the October-December quarter on Wednesday. Many analysts believe growth slowed in the final three months of last year to less than 2 percent.

The government releases its first estimate of economic growth for the fourth quarter on Wednesday.

Associated Press

Source: http://hosted2.ap.org/APDEFAULT/f70471f764144b2fab526d39972d37b3/Article_2013-01-28-Durable%20Goods/id-95f8a882693249eb8154220298b51f25

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