Orders to factories for big-ticket manufactured goods jumped unexpectedly in December, good news amid signs that the U.S. economy might be tipping toward a recession.
The 5.2 percent increase in demand for computers, aircraft and other items made to last several years was the biggest since July, the Commerce Department said Tuesday in Washington.
The data implies manufacturing might have kept the economy expanding in the fourth quarter, offsetting a slide in home prices and reduced access to credit. The Federal Reserve is still likely to cut interest rates Wednesday to ensure against a broader downturn, economists said.
“It doesn’t appear that the business sector is under the kind of stress that typically leads to recession,” said Dean Maki, chief U.S. economist at Barclays Capital in New York. “Recent data have been inconsistent with the view that the economy is currently in recession.”
The government also revised upward November’s durable goods data, increasing to a 0.5 percent gain from the 0.1 percent increase previously reported. Excluding transportation, demand rose 2.6 percent in December.
“This report is a relief,” said Ian Morris, chief U.S. economist at HSBC Securities USA Inc. in New York. “The fear was that capital spending could collapse, which could then see jobs plunge.”
Bookings for non-defense capital goods excluding aircraft, a proxy for future business investment, climbed 4.4 percent, the most since March 2007. Shipments of those items, used in calculating gross domestic product, rose 2 percent, the most since March 2006.
The overall increase was led by the biggest increase in machinery bookings since December 2006, a jump in commercial aircraft and a 12 percent gain in communications gear. Chicago-based Boeing Co. said it received 287 aircraft orders in December, up from the 177 the previous month.
Also Tuesday, the Conference Board reported that consumer confidence fell sharply in January on worries over deteriorating business conditions and a weakening job market.
The New York-based business research group said that its consumer confidence index dropped to 87.9 in January from a revised 90.6 in December.
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