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U.S. Durable Goods Orders Rebound 2.8% In January, More Than Expected

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Reflecting a notable rebound in orders for transportation equipment, the Commerce Department released a report on Thursday showing that U.S. durable goods orders increased by much more than expected in the month of January.

The report said durable goods orders surged up by 2.8 percent in January after tumbling by a revised 3.7 percent in December.

Economists had expected durable goods orders to jump by 1.7 percent compared to the 3.4 percent drop that had been reported for the previous month.

The rebound by durable good orders came as orders for transportation equipment surged up by 9.1 percent in January after plunging by 10.1 percent in December.

Orders for commercial aircraft and parts showed a particularly strong rebound, soaring by 128.5 percent in January after plummeting by 58.3 percent in the previous month.

However, excluding the rebound in orders for transportation equipment, durable goods orders rose by just 0.3 percent in January compared to economist estimates for a 0.5 percent increase.

While orders for computers and machinery showed notable increases, the growth was partly offset by a steep drop in orders for electrical equipment and appliances.

The report also said orders for non-defense capital goods excluding aircraft, an indicator of business spending, rose by 0.6 percent in January following a 0.7 percent drop in December.

Meanwhile, shipments of non-defense capital goods excluding aircraft, which get plugged into GDP, edged down by 0.3 percent in January after rising by 0.3 percent in the previous month.

Peter Boockvar, managing director at the Lindsey Group, said, said, "Bottom line, the core rate of capital spending as measured by orders for non-defense capital goods ex-aircraft remains mediocre and the hoped for acceleration is just not happening."

"Companies, while still investing in their businesses, are finding buybacks and dividends that much more attractive as zero interest rates demand higher yields and stocks from investors," he added.

Next Thursday, the Commerce Department is scheduled to release a separate report on factory orders, which includes data on orders for both durable and non-durable goods.

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