ZCZC
BCN-15
US-MANUFACTURING-DURABLE-INDICATOR
US businesses spend less on equipment in December
WASHINGTON, Feb 22, 2019 (AFP) – Rising sales of US autos and aircraft in
December masked fresh signs of weakening business investment at the end of
2018, government data showed Thursday.
Together with a sudden plunge in manufacturing in the Philadelphia region,
the figures confirmed a softening in US factory activity.
The weaker numbers seem to support the Federal Reserve’s recent decision
to hold off on any further interest rate increases, after hiking four times
last year, amid signs the economy could be slowing.
Sales of big-ticket manufactured goods rose 1.2 percent in December to
$254.4 billion, the Commerce Department reported, which was slightly below
what economists were expecting from the report that was delayed by 35-day
government shutdown.
Sales of autos and parts rose 2.1 percent from November while civilian
aircraft soared 28.4 percent.
But outside the highly volatile transportation segment, sales rose a
paltry 0.1 percent, also lower than expectations.
Primary metals, a sector benefitting from President Donald Trump’s steep
new import duties, fell nearly a full percentage point.
And machinery, computers, telecommunications equipment also all fell.
Meanwhile, spending on “core” capital goods — which strips out aviation
and defense items — fell 0.7 percent, deepening November’s losses which were
also revised downward to a one percent loss.
The White House has said a major rationale for 2017’s sweeping tax cuts
was to boost business investment, which would in turn spur hiring and
economic growth, but instead weakened at the end of last year.
Economist Joel Naroff said that combined with weak housing sales numbers
in January, the industrial data meant “it appears the bloom is off the
economic expansion rose.”
“Whatever business spending boom we got from the tax cuts looks like it
has dissipated,” he said in a client note.
“The economy is coming off its tax-induced sugar high.”
Still, chief White House economist Kevin Hassett said this week that the
factories built last year should contribute to robust and sustained economic
growth in 2019 of three percent or more.
In a separate report Thursday, the Philadelphia Federal Reserve Bank said
its regional manufacturing index unexpectedly dropped to a reading of
negative 4.1, well below the 12 that economists had been expecting.
Analysts say the indicator may not tell the full story as expectations for
the future were rosier, but it was the first negative reading in almost three
years and continued a steady slowing trend since early 2017.
BSS/AFP/HR/0942