U.S. Durable Goods Orders Unexpectedly Tumbled 4.3% In December

(RTTNews) - With orders for transportation equipment showing a substantial decrease, the Commerce Department released a report on Tuesday showing that new orders for U.S. manufactured durable goods unexpectedly dropped in the month of December.

The report said durable goods orders tumbled by 4.3 percent in December following a downwardly revised 2.6 percent increase in November.

The drop in orders came as a surprise to economists, who had expected orders to increase by about 1.8 percent compared to the 3.4 percent growth that had been reported for the previous month.

Orders for transportation equipment led the decrease, plunging by 9.5 percent in December after jumping by 7.9 percent in November.

However, excluding the steep drop in orders for transportation equipment, durable goods orders still fell by 1.6 percent in December after edging up by 0.1 percent in November. Ex-transportation orders had been expected to rise by 0.5 percent.

The report showed that orders for computers and electronic products dove by 7.8 percent, while orders for fabricated metal products and primary metals also showed notable decreases.

Additionally, orders for non-defense capital goods excluding aircraft, an indicator of business spending, fell by 1.3 percent in December after rising by 2.6 percent in November.

Shipments of non-defense capital goods excluding aircraft, which get plugged into GDP, also edged down by 0.2 percent after climbing by 2.3 percent in the previous month.

James Knightley, an economist at ING Bank, said, "Overall, this report suggests that some caution is warranted regarding the U.S. growth story and we remain content to be somewhat sub-consensus on GDP growth, predicting a 4Q figure of 2.9% on Thursday."

Next Tuesday, the Commerce Department is scheduled to release a separate report on factory orders in the month of December. The report includes data on orders for both durable and non-durable goods.