Core capital goods orders in the U.S drop to an eight-month low in December

The
U.S Census Bureau said in its monthly report on Tuesday that new orders for
core durable goods in the United States of America decline to an eight-month
low in December. Highlighting the weakness in shipments driven by a further
contraction in business investments in Q4, the Bureau reported the U.S
economy to have remained under pressure in December.

As
per Tuesday’s data from the Commerce Department, orders for capital goods
(non-defense and excluding aircraft) saw a 0.9% drop in December. Much of the
decline was attributed to the falling demand for primary metals, electrical
appliances, machinery, electrical equipment, and components etc.

Economists
Expected Core Capital Goods Orders To Remain Unchanged In December

The
aforementioned decline was branded as the sharpest since April. November’s report
had previously announced the core durable goods orders to have climbed 0.2%. As
per the revised data, however, the figure has been reduced to 0.1% for
November. Economists were expecting the core capital goods orders to remain
unchanged in December.

On
a year over year basis, December’s data marked a 0.8% growth in core capital
goods orders. Core capital goods saw a 0.4% decline in shipments in December.
The unrevised figure for November was capped at 0.3%.

The
economic data released earlier today also accentuated that business investment
in the U.S has remained in the contraction category in the past two quarters. Fourth-quarter
results are expected to print a further stretch in contraction as well. For the
fourth quarter, Atlanta Fed anticipated a 1.8% annual growth rate for the U.S
GDP. In the quarter of July to September, the growth rate was recorded at a
much higher 2.1% instead.

Further
insight into the U.S GDP in the fourth quarter will be revealed in the government
data on Thursday.

Boeing’s
Complications Can See A 0.5% Decline In The U.S GDP In Q1

As
per the analysts, the United States’ trade war with China that spanned over 18
months weighed heavily on manufacturing that hurt business investment at large.
While the conflict has been eased with the phase 1 trade deal that was signed
earlier this month, the manufacturing sector in the U.S is still struggling to
recover the previous losses.

Production
for Boeing’s 737 Max has also been temporarily halted in January amidst the FAA’s
investigations. Accounting for 11%
of the U.S economy, Boeing’s ongoing tragedy has not been helpful in
boosting manufacturing either. According to economists, the U.S GDP could
decline by 0.5% in the first quarter if Boeing’s 737 Max jetliner remains
grounded in 2020’s first half.  

On
overall durable goods orders, the Census Bureau announced a 2.4% growth in
December after a 3.1% decline in November. Analysts were expecting a lower 2.1%
growth in durable goods orders in December.