WASHINGTON: New orders for key US-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.Though tensions have eased with the signing this month of a"Phase 1" trade deal between Washington and Beijing, Boeing continues to loom over manufacturing.
Core capital goods orders rose 0.8 per cent in 2019. Shipments of core capital goods decreased 0.4 per cent last month. Core capital goods shipments are used to calculate equipment spending in the government's gross domestic product measurement. They declined by an unrevised 0.3 per cent in November.
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 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 US Treasury prices fell.The US-China trade war has hurt business confidence, undercutting capital expenditure and pushing manufacturing, which accounts for 11 per cent of the economy, into recession.
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