Key Business Spending Indicator Falls Unexpectedly

February 25, 2019

After being delayed by the government shutdown, the Commerce Department released U.S. manufacturing number for December, and the report may be signaling that businesses confidence is eroding as the global economy slows.

Total orders of U.S.-made durable goods—manufactured items meant to last more than three years—rose by 1.2 percent, but the more closely watched indicator of business spending is capital goods, which are products used in the manufacturing of other goods, and are sold to businesses rather than consumers. Capital goods fell 0.7 percent.

December’s decline was the fourth in the last five months. Economists had forecast an increase in capital goods orders of 0.2 percent. The report, paired with a steep decline in retail sales in December, has caused economists to lower their Q4 GDP estimates.

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