December Orders for US Durable Goods Advance 2.4%

Last month's orders were the strongest showing since August, but would be much lower excluding defense.

In this Dec. 7, 2015 file photo, a Boeing 737 MAX airplane being built is shown on the assembly line in Renton, WA.
In this Dec. 7, 2015 file photo, a Boeing 737 MAX airplane being built is shown on the assembly line in Renton, WA.
AP Photo/Ted S. Warren

WASHINGTON (AP) — Orders to U.S. factories for big-ticket manufactured goods rose in December as a big jump in demand for military aircraft offset a sharp decline in commercial aircraft that reflected Boeing’s continued problems with its 737 Max. A key category that tracks business investment fell by the largest amount in eight months.

The Commerce Department said Tuesday orders for durable goods rose 2.4% in December, the strongest showing since August. However, excluding defense, new orders would have fallen 2.5%.

The category that tracks business investment plans dropped 0.9%, the biggest decline since a 1.1% setback in April.

Business investment has been hurt over the past year by uncertainties generated by President Donald Trump’s trade war with China. Now that agreement has been reached on a Phase One deal, there is hope that a more stable outlook on trade will convince businesses to start investing again to expand and modernize their operations.

Demand for commercial aircraft fell a sharp 74.7%, reflecting the struggles Boeing has had with its troubled 737 Max plane following two fatal crashes.

Economists believe Boeing’s difficulties could trim overall economy growth by as much as one-half percentage point in the current January-March quarter.

The commercial aircraft drop was offset by a 168.3% surge in demand for military planes.

Orders for motor vehicles and parts dipped 0.9% leaving overall activity in the transportation sector up by 7.6%. Excluding transportation, which can be volatile, orders would have fallen 0.1% in December following a 0.4% drop in November.

Demand for machinery fell 1.1% in December while demand for computers and related products declined 9.7%.

U.S. manufacturing was hurt last year by a global economic slowdown and the uncertainties caused by the Trump administration’s get tough trade policies.

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