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January 28, 2020 9:30 AM, EST

Orders for US Durable Goods Advance 2.4% in December

Unsold Clubman SUVs sit at a Mini dealership in Colorado in August 2019.A line of unsold Clubman SUVs sit at a Mini dealership in Colorado in August 2019. Orders for motor vehicles and parts dipped 0.9% in December. (David Zalubowski/Associated Press)

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WASHINGTON — Orders to U.S. factories for big-ticket manufactured goods rose in December as a big jump in demand for military aircraft offset a sharp decline in commercial aircraft that reflected Boeing’s continued problems with its 737 Max. A key category that tracks business investment fell by the largest amount in eight months.

The Commerce Department said Jan. 28 that orders for durable goods rose 2.4% in December, the strongest showing since August. However, excluding defense, new orders would have fallen 2.5%.

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The category that tracks business investment plans dropped 0.9%, the biggest decline since a 1.1% setback in April.

Now that agreement has been reached between the United States and China on a phase one deal, there is hope that a more stable outlook on trade will convince businesses to start investing again to expand and modernize their operations.

Demand for commercial aircraft fell a sharp 74.7%, reflecting the struggles Boeing has had with its troubled 737 Max plane following two fatal crashes.

Economists believe Boeing’s difficulties could trim overall economy growth by as much as one-half percentage point in the current January-March quarter.

The commercial aircraft drop was offset by a 168.3% surge in demand for military planes.

Orders for motor vehicles and parts dipped 0.9% leaving overall activity in the transportation sector up by 7.6%. Excluding transportation, which can be volatile, orders would have fallen 0.1% in December following a 0.4% drop in November.

Demand for machinery fell 1.1% in December while demand for computers and related products declined 9.7%. U.S. manufacturing was dampened last year by a global economic slowdown and the uncertainties caused by the Trump administration’s trade policies.

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