Durable Goods Orders Fall 0.9 Percent

New orders for long-lasting U.S. made goods fell 0.9 percent last month as demand for autos and civilian aircraft fell, but businesses boosted orders for capital goods, the government said on Thursday.

A 5.3 percent plunge in transportation equipment orders lay behind the drop in demand for durable goods (search), pricey manufactured items made to last three years or more. It was the first decline in durable goods orders since October, the Commerce Department (search) said.

Excluding the often-volatile transport category, however, durable goods orders climbed 0.8 percent.

Wall Street economists had expected durable goods order to rise 0.1 percent with orders outside the volatile transport category up a sharper 0.4 percent.

The report also showed defense capital goods orders dropped a sharp 9.8 percent, despite a whopping 56.9 percent advance in military aircraft orders. Even with defense orders stripped out, demand for durable goods was still down 0.8 percent, the first drop in three months.

The report offered generally upbeat news on the business-spending outlook.

Civilian capital goods orders, excluding aircraft — a figure economists look to as a proxy for future business spending plans — grew a healthy 2.9 percent.

While a 3.8 percent drop in motor vehicle orders and a 27.1 percent plunge in civilian aircraft demand pulled overall durable goods orders down, orders for computers and communications equipment also fell. But orders for primary metals, fabricated metal products and machinery all posted gains.

In addition, shipments were up 1.5 percent, building on a 2.8 percent December advance — suggesting spending on durable goods could help underpin economic growth at the start of the year.