Cars and planes boost durable goods orders in December, but growth is minimal excluding transportation

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Numbers: Cars and aircraft boosted durable goods orders in the United States in December, but demand remained weak in other key segments of manufacturing and business investment declined at the end of the year.

Durable goods orders rose 1.2% in December, according to a government report delayed by more than a month due to the recently closed partial closure

Economists surveyed by MarketWatch had forecast a 1.4% increase in orders for durable goods or products manufactured for a minimum of three years.

If cars and planes are excluded from the equation, orders rose 0.1%. Transportation often exaggerates the highs and lows of orders because of the high demand from one month to the next.

The 0.7% increase in durable goods orders originally announced in November was revised to 1%.

What happened: Commercial aircraft orders increased 28% in December and new car and truck bookings increased 2.1%.

Beyond that, the industrial sector was weak. Orders fell for machinery, base metals, networks and electrical equipment.

A key measure of business investment, known as master orders, declined 0.7% in December.

Businesses reduced their investments towards the end of the year, worried about what appeared to be a growing threat of recession, political unrest in Washington, and an ongoing trade dispute with China that disrupted supply chains.

Investment for the whole year however increased by 6.1%.

Big picture: The industrial portion of the economy slowed towards the end of 2018, but fears of recession largely dissipated and the United States continued to grow at a rapid pace in early 2019. Strong consumer spending spurred the factories to keep their breath.

The decline in capital expenditures is a persistent concern. Greater investments are the key to a stronger economy and a better standard of living in the long term. The persistent trade dispute and the weakness of the global economy have led companies to reevaluate their projects.

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Market reaction: The Dow Jones Industrial Average

DJIA, -0.39%

and S & P 500

SPX, -0.46%

after a surprisingly weak survey of manufacturing conditions in the Philadelphia area.

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The 10-year Treasury yield

TMUBMUSD10Y, + 1.63%

was flat at 2.67%.