Business investment in the US appeared weak into the end of 2019, even as Washington and Beijing approached an interim deal on trade, the stock market rallied to a record and the Federal Reserve indicated it would keep interest rates on hold this year.

The headline index tracking durable goods orders rose 2.4 per cent in December to $245.5bn, rebounding from a downwardly revised 3.5 per cent drop (previously a 3.1 per cent drop) in November, Department of Commerce data showed on Tuesday.

That blew past the median forecast among economists for a 0.4 per cent rise, but signs of lacklustre spending were evident in the indices stripping out purchases of big-ticket items like aircraft and defence. These not only fell short of Wall Street forecasts, but also saw downward revisions to the previous month’s figures.

Orders for durables excluding defence were down 2.5 per cent, with November revised to a 0.5 per cent drop from an initial result of 0.7 per cent growth, and due primarily to a large month on month fall in orders for commercial aircraft as Boeing’s 737 Max troubles continue to put hamper the sector.

New orders for non-defence capital goods excluding aircraft, which is regarded as a proxy for business investment, tumbled 0.9 per cent from 0.1 per cent growth (revised lower from 0.2 per cent) in November. That marked the biggest drop since April. Economists had expected zero growth.

“The jump in the headline hides much weaker details, with orders for Non-defense capital goods down 0.9%, the worst performance since April,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, said. “The monthly numbers are noisy, though, and the trend is drifting down slowly, much less bad than the rollover implied by business surveys. This story seems unlikely to change much in the near future.”

Andrew Hunter, senior US economist at Capital Economics, said the data suggest business equipment investment fell again in the fourth quarter, but added there were signs things could improve in the first half of 2020.

“The sharp fall in corporate borrowing costs in recent months, easing of trade uncertainty and improvement in the capex intentions surveys all suggest that equipment investment will start to rebound before long,” he said.

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