New orders for long-lasting US-made goods rose 0.6 percent last month despite a sharp plunge in demand for new aircraft, according to a government report that reflected underlying economic strength. A separate report released on Thursday showed a smaller-than-expected rise in initial claims for unemployment aid, which kept them at a level economists view as consistent with further labour-market gains.
The rise in orders for durable goods, items made to last three years or more, came in close to the 0.5 gain expected on Wall Street, but details in the Commerce Department report showed more strength than most economists had anticipated.
Excluding transportation, orders rose 2.1 percent, the first gain since September and well ahead of forecasts for a 1 percent gain. Non-defence orders rose 1.2 percent, also ahead of Wall Street forecasts. In addition, the department offered an upwardly revised reading on orders for November.
The report also offered a good signal on business spending as orders for non-defence capital goods, excluding aircraft, rose 1.8 percent. Economists track that figure closely as a proxy for business investment plans.
US government bond prices fell in the wake of the reports, but the value of the dollar was little changed.
For the year as a whole, durable goods orders advanced a healthy 10.9 percent, the biggest rise in 10 years.
A sharp plunge in aircraft orders, which often swing widely from month-to-month, held back December's advance. Demand for civilian aircraft dropped 16.7 percent, while defence plane orders plummeted 32.3 percent.
The drop in aircraft orders pushed overall demand for transportation equipment down 3 percent, despite strong orders for motor vehicles.
Much of last months' orders strength was concentrated in the computers and electronic products category, which registered a 6.4 percent gain, with demand for computers and communications equipment both up sharply.
Machinery orders also advanced solidly, while demand for primary metals edged higher. In contrast, orders for electrical equipment had their steepest fall since July 2002, while demand for fabricated metals inched lower.
Shipments of durable goods rose 2.1 percent last month, suggesting business investment should make a healthy contribution to the fourth-quarter gross domestic product growth, which will reported on Friday.
SMALL CLAIMS RISE:
In a separate report, the Labour Department said the number of Americans filing first-time claims for unemployment benefits rose 7,000 last week to 325,000.
Initial jobless claims, a rough guide to the pace of layoffs, rose to 325,000 in the week ended January 22 from a revised 318,000 in the previous week, it said.
Wall Street economists had forecast initial claims, a rough guide to the pace of layoffs, to rise to 334,000.
Gary Thayer, chief economist at A.G. Edwards & Sons in St. Louis said the data was "consistent with a still relatively good labour market."
A four-week moving average of claims, which analysts follow closely because it smoothes volatility in weekly data, rose to 341,750 from 340,750 in the prior week.
Another labour market barometer suggested some lingering labour market weakness. The number of people who remained on the benefit rolls after claiming an initial week of aid rose 142,000 to 2.84 million in the week ended January 15, the latest week for which figures were available.
The rise in so-called continued claims was the largest one-week rise since a 158,000 increase in mid-July.