Orders for U.S.-manufactured durable goods unexpectedly fell in
December along with a gauge of planned business spending, casting a shadow on a
number of otherwise robust economic indicators.
Durable goods orders dropped 4.3 percent in December, weighed down
by weak demand for transportation equipment, primary metals, fabricated metal
products, computers and electronic products and capital goods.
Economists polled by Reuters had expected orders for durable goods
- items from toasters to aircraft meant to last three years or more - to rise
1.8 percent in December after November's previously reported 3.4 percent
advance.
Durable goods inventories increased 0.8 percent last month,
pushing the inventory-to-shipments ratio to an eight-month high.
"Real inventories now look to have been accumulated at a
heady $132 billion annual pace last quarter - an unsustainably strong rate
which should pose some headwinds for growth in the early part of this
year," said Michael Feroli, an economist at JPMorgan in New York.
The drop in durable goods orders put a wrinkle on the economy's
outlook, which had been bolstered by upbeat data on consumer spending and
industrial production, and it raised concerns of slower growth in the first
quarter.
Those concerns, however, were tempered by the rise in consumer
confidence and house prices. Consumer confidence hit a five-month high in
January and house prices posted their biggest year-on-year gain in almost eight
years in November, other reports showed on Tuesday.
The Conference Board said its index of consumer attitudes rose to
80.7 this month from 77.5 in December. January's reading was the highest since
August and reflected rising optimism among households about the labor market
and business conditions.
Separately, the Standard & Poor's/Case Shiller gauge of house
prices in 20 metropolitan areas increased 13.7 percent in November from a year
ago, the largest rise since February 2006.
The mixed batch of data came as officials from the Federal Reserve
were due to start a two-day policy meeting.
The Fed in December gave the economy a vote of confidence with an
announcement that it would start dialing back its monthly bond purchases this
month. It is expected announce further cuts to the bond-buying program on
Wednesday.
The government will release its advance fourth-quarter GDP report
on Thursday. The economy likely grew at a 3.2 percent annual pace in the fourth
quarter, according to a Reuters survey of economists, after expanding at a 4.1
percent rate in the prior period.
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