U.S. business investment weak; consumer confidence at five-month high

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New orders for key U.S.-made capital goods dropped by the most in eight months i...

WASHINGTON - New orders for key U.S.-made capital goods dropped by the most in eight months in December and shipments were weak, suggesting business investment contracted further in the fourth quarter and remained a drag on economic growth.

Weak business investment and the resulting slump in manufacturing have been on the radar of Fed officials who have blamed trade tensions, especially the White House’s 18-month trade war with China, and an uncertain global economic growth outlook for the malaise. Data for November was revised lower to show these so-called core capital goods orders edging up 0.1% instead of gaining 0.2% as previously reported. Economists polled by Reuters had forecast core capital goods would be unchanged in December.

In a separate report on Tuesday, the Conference Board said its consumer confidence index increased 3.4 points to a reading of 131.6 in January, the highest reading since August. Economists expected a temporary drop in consumer confidence in February because of the deadly coronavirus, which has killed more than 100 people in China, with cases reported in some countries including the United States, France and Japan.

The dollar .DXY firmed against a basket of currencies as concerns about the economic fallout from the coronavirus outbreak boosted demand for safe-haven currencies. Stocks on Wall Street were trading higher, while U.S. Treasury prices fell.The U.S.-China trade war has hurt business confidence, undercutting capital expenditure and pushing manufacturing, which accounts for 11% of the economy, into recession.

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