WASHINGTON (Reuters) – US business investment spending fell for a fourth straight month in December, a sign that slowing global growth may be weighing on the economy, but consumers remained upbeat and new home sales in December hit their highest level since June 2008.
“The drop in (capital spending) will weigh on growth, though stronger consumer spending should keep GDP from slowing too much,” said Chris Low, chief economist at FTN Financial.
The Commerce Department said non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, dropped 0.6 per cent last month after a similar decline in November. Orders for these so-called core capital goods started falling in September, the longest downward stretch since 2012.
Economists, who had expected a 0.5 per cent gain, said the surprise drop last month likely reflected weak overseas demand for a wide range of US capital goods and declining demand at home for energy-related equipment.
A strengthening US dollar may also have been a factor, analysts said. The dollar gained 12.8 per cent last year and is up 4.2 per cent so far in 2015 against a basket of currencies, making US exports more expensive.
The dour business investment report came as construction and mining equipment maker Caterpillar Inc reported a nearly 25 per cent decline in fourth-quarter profit and warned that falling oil prices would hurt its business in 2015.