US core business equipment orders increase by more than forecast

US orders and shipments for business equipment both rose in December by more than forecast, pointing to firmer investment going into the new year.

Core capital goods orders, a proxy for investment in equipment that excludes often-volatile aircraft and military hardware bookings, increased 0.5% last month after an upwardly revised 0.9% increase in November. The data from the Commerce Department released Tuesday aren’t adjusted for inflation.

Core capital goods shipments, a figure that excludes often-volatile sales of military equipment and commercial aircraft, increased 0.6% in December — the most in nearly a year. The latest figures will help economists fine-tune their business equipment spending estimates for fourth-quarter gross domestic product. Those figures will be reported on Thursday.

Including aircraft, shipments of nondefense capital goods jumped 3.5%. Before the report, business equipment spending was seen subtracting 0.19 percentage point from fourth-quarter growth, according to the Atlanta Fed’s GDPNow forecast.

Businesses may becoming more comfortable making long-term investments since the US presidential election despite borrowing costs remaining high with fewer Federal Reserve interest-rate cuts expected in 2025. Some firms also noted a pull-forward of business demand ahead of potential tariffs from the Trump administration.

“I am quite confident that, sooner or later, businesses are going to invest robustly, as various measures of business sentiment suggest that executives are remarkably upbeat about the economic outlook in the wake of the election results,” Stephen Stanley, chief US economist at Santander US Capital Markets LLC, said in a note. “These data suggest that business investment may already be surging.”

Meanwhile, the value of overall durable goods orders — items meant to last at least three years — slid 2.2% after a similar decrease in the prior month. Excluding aircraft and other transportation equipment, orders rose 0.3%.

The US economy is expected to have expanded 2.7% in the fourth quarter, according to the median projection in a Bloomberg survey of economists. Data out last month showed the economy expanded at a faster pace in the third quarter than previously estimated, due in part to stronger equipment spending.

Commercial Aircraft

The Commerce Department’s durable goods report showed commercial aircraft bookings, which are volatile from month to month, unexpectedly plunged nearly 46% after a 20.1% drop in November.

That stands in contrast to industry leader Boeing Co.’s reported 142 orders in December, which were the most in a year and up from 49 a month earlier. The company’s commercial aircraft deliveries are showing signs of stabilizing after a prolonged strike, a near-catastrophic accident and other challenges last year. Boeing reported 30 deliveries last month, the most in three months.

While often helpful to compare the two, aircraft orders are volatile and the government data don’t always correlate with the planemaker’s monthly figures.

The manufacturing sector has shown signs of stabilizing after struggling last year. The Institute for Supply Managements Supply Chain Planning Forecast published last month showed purchasing and supply executives expect to see manufacturing growth in 2025.