New orders for U.S. business equipment increased more than anticipated in December, indicating robust capital investment at the end of last year as uncertainty around trade policies diminished. Data released by the U.S. Commerce Department on Wednesday showed that orders for core capital goods—which exclude aircraft and military hardware and serve as a gauge for equipment investment—rose 0.6% in December from the previous month. The November increase was revised upward to 0.8%, double the initial estimate. In a survey of economists, the median forecast had projected a 0.3% rise for December.
Total bookings for durable goods—items intended to last at least three years—fell 1.4%, largely restrained by a decline in aircraft orders. Boeing reported receiving more aircraft orders in December than in the prior month, though the government figures do not always align precisely with the plane manufacturer's monthly data.
Meanwhile, shipments of non-defense capital goods, including aircraft, climbed 1.8%. This figure feeds directly into the equipment investment component of the Gross Domestic Product (GDP) report. Unlike orders, which can be canceled, the government uses shipment data as an input for GDP calculations.
Economists anticipate that business investment will pick up this year as companies take advantage of tax incentives under the "Big Beautiful Act" enacted last year. Investment related to artificial intelligence is also expected to remain solid.
The durable goods report indicated that growth in bookings was fairly broad-based, spanning communications equipment, computers, metals, electrical goods, and machinery. Motor vehicle bookings recorded their largest monthly increase since June of last year.
The report also showed that shipments of core capital goods—a less volatile measure of business investment that excludes aircraft and military hardware—rose 0.9% in December. Over the final three months of the year, core capital goods shipments increased at an annualized rate of 8.2%. Economists often favor core equipment shipment and order data as they provide a clearer picture of underlying business investment trends and their impact on the economy.
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