New orders for U.S. factory goods fell for a fifth straight month in December, but a smaller-than-previously reported drop in business spending plans supported views of a rebound in the months ahead.
Other data on Tuesday showing better-than-expected sales in January by the country’s leading automobile manufactures also offered a silver lining for a sector that has taken a hit from weak global demand and falling crude oil prices.
“It suggests that activity will pick up in coming months,” said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto.
The Commerce Department said new orders for manufactured goods declined 3.4 percent as demand fell across a broad sector of industries. That followed a 1.7 percent decrease in November and exceeded economists expectations for a 2.2 percent drop.
The department also said orders for non-defense capital goods excluding aircraft – seen as a measure of business confidence and spending plans – slipped only 0.1 percent instead of the 0.6 percent drop reported last month.
Manufacturing is being constrained by weakening demand in Europe and Asia, as well as a strong dollar and falling crude oil prices, which have caused some companies in the energy sector to either delay or cut back on capital expenditure projects.
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