BUSINESS

Orders for durable goods rise after businesses step up spending on equipment and machinery

01/26/2012 09:50 EST | Updated 03/27/2012 05:12 EDT
WASHINGTON - Orders to U.S. factories for long-lasting manufactured goods increased in December, lifted by solid business spending on machinery and equipment.

The second straight monthly gain in durable goods offered more evidence that economy started the year with momentum.

Orders for durable goods rose 3 per cent last month, the Commerce Department said Thursday. Durable goods are products expected to last at least three years.

And demand for so-called core capital goods, such as computers and machinery, posted a solid 2.9 per cent increase. That pushed orders for this category to a record $68.9 billion.

Economists pay close attention to so-called core capital goods because they are often viewed as a good way of gauging business investment plans.

Orders have climbed more than 45 per cent since hitting a recession low in April 2009. That has kept factories busy and helped the economy grow at a slow but steady pace.

Businesses cut back on core capital goods in November for the second straight month, which drew some concerns from economists. The Federal Reserve on Wednesday also cited the decline while warning that the economy remains vulnerable.

An increase in total durable goods orders bolstered the view sketched by other data showing the economy picked up in recent months.

Companies are hiring more, factories are making more goods and more people are buying cars. Still, the threat of a recession in Europe is likely to be a drag on the global economy.

Manufacturing has been a bright spot in the current recovery. U.S. factory activity has been lifted a surge in exports but economists are worried that the growth in exports could falter if overseas markets such as Europe show signs of slowing. Europe accounts for about one-fifth of U.S. exports.