US durable goods fall back by more than expected in January

Durable goods orders fell more sharply than forecast last month, amid large drops for both civilian and military aircraft.

Orders for goods made to last more than three years shrank by 3.7% month-on-month to reach $239.7bn, according to the Department of Commerce.

Economists had penciled in a drop of 2.5%.

December's increase was also marked down by two tenths of a percentage point to show a rise of 2.6%.

Nevertheless, in comparison to a year ago durable goods orders were ahead by 8.9%.

Tansportation orders were by far the weakest link in the chain, plummeting 10% to $77.7bn, as those for non-defence aircraft and parts plunged by 28.4% versus December to hit $10.38bn and orders for defence aircraft and parts dropped 45.6% on the month to $2.76bn.

New orders for non-defence capital goods, excluding aircraft, a key leading indicator of investment trends, dipped by 0.2% month-on-month to $66.7bn, but were 8.0% higher in comparison to their level one year ago.

Commenting on Tuesday's data, Andrew Hunter, US economist at Capital Economics, said: "The apparent slowdown in underlying capital goods orders echoes the weakening in some of the business surveys, and it now looks like the double-digit gains in business equipment investment seen in the second half of last year are unlikely to be repeated.

"That said, with the strong global backdrop continuing to benefit manufacturers and the recent tax cuts set to provide some further support, we still expect business investment to expand at a healthy pace over 2018 as a whole."