NEW orders for long-lasting US manufactured goods in January rose by the most in 10 months as demand picked up broadly, offering a ray of hope for the downtrodden manufacturing sector.
While other data on Thursday showed new applications for unemployment benefits increased last week, they remained below levels associated with a tightening labor market.
The reports should help calm fears of a recession that have spooked investors on the stock market.
“The manufacturing malaise that plagued the US is not broad-based. You don’t get a recession when capital spending is at worst, moving sideways, and jobless claims are near cycle lows on a trend basis,” said Jacob Oubina, senior US economist at RBC Capital Markets in New York.
The Commerce Department said orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, surged 4.9 per cent last month, reversing December’s 4.6 per cent plunge. January’s increase was the largest since March and beat economists’ expectations for only a 2.5 per cent rise. Non-defence capital goods orders excluding aircraft, a closely watched proxy for business spending plans, jumped 3.9 per cent after tumbling by a revised 3.7 per cent in December.
These so-called core capital goods orders were previously reported to have decreased 4.3 per cent in December.
The durable goods report was the latest indication that the worst of the manufacturing downturn was probably over. Manufacturing output rose solidly in January and factory payrolls that month increased by the most since August 2013.
The report also added to data on retail sales, employment, existing home sales and industrial production in suggesting that the economy regained its footing at the start of the year after stumbling in the fourth quarter.
Manufacturing, which accounts for 12 per cent of the US economy, remains constrained by a strong dollar, weak global demand and capital spending cuts by oilfield service firms like Schlumberger and Halliburton following a plunge in oil prices.
