New orders for U.S.-made goods rose more than expected in January, a second straight increase that indicated the recovery in the manufacturing sector is continuing to gain strength.
The Commerce Department said factory goods orders rose 1.2% after an unrevised 1.3% jump in December. Economists polled by Reuters had forecast a 1.0% gain.
“Manufacturing, which accounts for about 12 percent of the U.S. economy, is regaining its footing after being buffeted by lower oil prices, a strong dollar and an inventory overhang,” Reuters reported.
The sector has benefited from as rising prices for commodities spur demand for machinery. Another boost could come from the Trump administration’s proposed tax reform.
“Promises of a lower corporate tax bill have buoyed business confidence in the last few months, but are yet to translate into strong business investment on capital goods,” Reuters said.
Non-defense capital goods excluding aircraft — a measure of business confidence and spending plans — slipped 0.1% in January instead of the 0.4% drop reported last month.
“The weakness in shipments points to continued sluggish growth in business spending on equipment, which increased at a 1.9 percent annualized rate in the fourth quarter,” Reuters said. “That was the first rise in over a year.”
The January factory goods report also showed that orders for transportation equipment increased 6.2%, reflecting a 62.2% surge in defense aircraft orders and a 69.8% jump in orders for civilian aircraft. Outside transportation, orders for machinery increased 0.9%.
Inventories of goods at factories rose 0.2% in January, the sixth increase in the past seven months. The inventories-to-shipments ratio was 1.31, unchanged from December.