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Bloomberg News/Landov An employee sits on top of a Beechcraft King Air turboprop aircraft. Orders for Pentagon-related weapons soared in December, but investment was weak in the civilian part of the manufacturing sector.
The numbers: Orders for long-lasting or durable goods surged 2.4% in December owing to the military, but business investment in the civilian part of the economy declined again to finish the year weakly.
Economists surveyed by MarketWatch had forecast a 0.3% decline in orders for durable goods — products made to last at least three years.
If the military buildup is set aside, orders for durable goods sank 2.5%.
Adding to a disappointing report, the government revised orders for November to show an even bigger 3.1% drop. Initially the decline was reported as 2.1%.
The weakness in orders and business investment could be a drag on the economy in 2020 unless it turns around.
What happened: Orders declined in most parts of the manufacturing base, including autos and commercial aircraft.
Bookings for passenger planes tumbled 75%, reflecting Boeing’s BA, -2.00% ongoing struggles with its grounded 737 Max. Auto orders sagged almost 1%, the government said Tuesday.
If cars and planes are stripped out, durable-goods orders slipped 0.1%. Transportation often exaggerates the ups and downs in orders because of lumpy demand from one month to the next.
Still, orders also declined for primary metals, machines and electrical equipment.
What’s more, a closely followed measure known as orders for core capital goods also fell nearly 1%. These orders as seen as a proxy for business investment, which has been weak for the past year.
Companies scaled back investment as the U.S. trade war with China heated up, a struggle that strained global supply chains and hurt U.S. exports.
Big picture: The U.S. economy has been carried by consumers for the past year, but it can’t grow any faster unless businesses pitch in.
An interim trade deal with China has eased tensions, but the world’s two largest economies are still at odds on a range of issues. Most economists predict business investment will also be lackluster in 2020. If so, that’s likely to keep the U.S. from growing more than 2%.
Read: These states had the lowest unemployment rates in 2019. What about swing states?
And: Share of union workers in the U.S. falls to a record low in 2019
Market reaction: The Dow Jones Industrial Average DJIA, -1.57% and S&P 500 SPX, -1.57% were set to open higher in Tuesday trades. Stocks sank on Monday amid fresh worries over the coronavirus in China.
Read: Economic hit from coronavirus likely to be short lived, but it’s still ‘a little scary, frankly’
The 10-year Treasury yield TMUBMUSD10Y, +0.53% was little changed at 1.61%.
