WASHINGTON – Orders to U.S. factories fell in January for a second consecutive month, but a key category that signals business investment plans rebounded. That could be an indication that businesses are gaining confidence.
Factory orders dipped 0.7 percent in January, the Commerce Department reported Thursday. That followed an even bigger 2 percent decline in December, which was a larger decrease than first reported and the biggest decline since July. The weakness in both months was led by large declines in demand for commercial aircraft.
Orders for core capital goods, a proxy for business investment, rose 1.5 percent in January, recovering after a 1.6 percent drop in December.
Demand for durable goods, items expected to last at least three years, was down 1 percent in January, while nondurable goods orders slipped 0.4 percent.
The estimate for durable goods was unchanged from a preliminary report. The weakness reflected a 20.2 percent plunge in orders for commercial aircraft, a drop that followed an even bigger 22.3 percent fall in December. Orders for motor vehicles and parts fell 0.9 percent, the second consecutive decline. Analysts say weakness in this area will be reversed, given expectations for continued gains in new car sales.
Orders for primary metals such as iron, steel and aluminum dropped 1.2 percent, demand for machinery was down 0.7 percent, and computer orders fell 46 percent.
Many economists say that manufacturing has gone through a soft patch but will be emerging to stronger growth in coming months.
That expectation is based on the view that the overall economy, after slowing in the final three months of last year and the first quarter this year, will rebound to stronger growth.