After reporting a notable increase in new orders for U.S. manufactured durable goods in the previous month, the Commerce Department released a report on Wednesday showing durable goods orders rose by much less than expected in the month of December.
The Commerce Department said durable goods orders edged up by 0.2 percent in December after surging by an upwardly revised 1.2 percent in November.
Economists had expected durable goods orders to increase by 0.9 percent compared to the 1.0 percent jump that had been reported for the previous month.
The weaker than expected growth was partly due to a pullback in orders for transportation equipment, which slumped by 1.0 percent in December after spiking by 1.9 percent in November.
Orders for non-defense aircraft and parts showed a particularly steep drop during the month, plummeting by 51.8 percent.
Excluding the decrease in orders for transportation equipment, durable goods orders climbed by 0.7 percent in December after advancing by 0.8 percent in November. Ex-transportation orders were expected to rise by 0.5 percent.
The increase in ex-transportation orders was partly due to a 2.4 percent jump in orders for machinery as well as more modest upticks in orders for fabricated metal products and primary metals.
The report also said orders for non-defense capital goods excluding aircraft, a closely watched indicated of business spending, rose by 0.6 percent in December after climbing by 1.0 percent in November.
"The weaker 0.2% gain in headline durable goods orders in December was mainly due to ongoing problems among aircraft manufacturers and a drop off in defense orders," said Michael Pearce, Senior U.S. Economist at Capital Economics.
He added, "The bigger story is the continued strong gains in core orders, which underlines that the recovery in business equipment investment - which looks set to rise above its pre-pandemic level in the fourth quarter - still has plenty of momentum."
The Commerce Department also said shipments of durable goods increased for the seventh time in eight months, jumping by 1.4 percent in December after rising by 0.4 percent in November.