06.03.201821:41:00UTC+00U.S. Manufacturing, Business Spending on Equipment Slows Down

New orders for U.S.-made goods marked their biggest decline in six months in January and business spending on equipment appeared to be slowing following its solid growth in 2017.

Factory goods orders dropped 1.4 percent amid a broad decline in demand, according to the Commerce Department. That was the biggest fall since July 2017 and followed five consecutive monthly increases. Factory orders climbed 1.8 percent in December.

Orders surged 8.4 percent on a year-on-year basis.

Orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans, dropped 0.3 percent in January instead of declining 0.2 percent as posted in February. Orders for these so-called core capital goods fell 0.5 percent in December.

That was the first back-to-back decline since May 2016. Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, was down 0.1 percent in January instead of edging up 0.1 percent as reported last month.

Core capital goods shipments rose 0.7 percent in December.

Prices of U.S. Treasuries increased after the data, while the dollar held at lower levels against a basket of currencies. U.S. stock indexes were trading slightly higher.

Business spending on equipment is cooling after growing by a solid 4.8 percent in 2017. It is likely to remain supported as companies are expected to use some of their deficit from a $1.5 trillion tax cut package to buy machinery and other equipment as they seek to boost sluggish productivity.