US Durable Goods Orders Slump; Business Investment on Equipment Appears Soft

• January marked the steepest decline in U.S. durable goods orders in nearly four years. Business equipment investment showed signs of easing, indicating a loss of economic momentum at the year's outset.
• Durable goods orders plummeted by 6.1% in January, with a significant decline in commercial aircraft bookings. Civilian aircraft orders plummeted 58.9% last month after rising 1.0% in December. Boeing reported on its website that it had received only three orders for commercial aircraft in January, sharply down from 371 in December. Overall transportation orders fell by 16.2% last month after slipping 0.6% in December.
• Nondefense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, edged up 0.1% in January after a revised 0.6% decline in the prior month.
• These so-called core capital goods orders were previously reported to have gained 0.2% in December, indicating a much weaker start for business equipment spending than anticipated. Nevertheless, business spending on equipment rebounded modestly in the fourth quarter after contracting in the July-September period. 
• Importantly, though there are signs that manufacturing, which accounts for 10.3% of the U.S. economy, is stabilising after production eased in 2023 amid 525 basis points worth of interest rate hikes from the Federal Reserve since March 2022, a full recovery is still a long way away. 

(Source: Reuters)