NEW orders for U.S.-made capital goods fell for a second straight month in January and shipments barely rose in the U.S., pointing to a slowdown in business spending on equipment after robust growth in 2017.

Overall orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, tumbled 3.7 percent last month as demand for transportation equipment plunged 10 percent. That was the biggest drop in six months and followed a 2.6-percent jump in December.

The report from the U.S. Commerce Department released Tuesday added to weak January retail sales, industrial production and home sales data in suggesting that economic growth moderated early in the first quarter. That was also underscored by other data showing a widening in the goods trade deficit in January.

“It is early but it’s shaping up to be a soft start to 2018,” said Jennifer Lee, senior economist at BMO Capital Markets in Toronto.

Orders for nondefense capital goods excluding aircraft, a closely watched proxy for business spending plans, dropped 0.2 percent last month after declining 0.6 percent in December.

That was the first back-to-back drop in these core capital goods orders since May 2016. Economists had forecast these orders rising 0.5 percent last month. Orders increased 8.0 percent on a year-on-year basis.

Shipments of core capital goods edged up 0.1 percent after an upwardly revised 0.7 percent rise in December. Core capital goods shipments are used to calculate equipment spending in the government’s gross domestic product measurement. They were previously reported to have increased 0.4 percent in December.

In another report Tuesday, the U.S. Commerce Department said the goods trade deficit rose 3.0 percent to US$74.4 billion in January. Exports of goods fell US$3.1 billion to US$133.9 billion. Goods imports slipped US$0.9 billion to US$208.3 billion.

The department also said wholesale inventories increased 0.7 percent in January. Retail inventories rose 0.8 percent.

Growth estimates for the first-quarter range from a 1.9 percent to 3.2 percent annualized rate. Business spending on equipment increased at its fastest pace in more than three years in the fourth quarter, contributing to the economy’s 2.6-percent growth pace during the final three months of the year.

Despite January’s decline in core capital goods orders, spending on equipment is likely to remain supported, with companies expected to use some of their windfall from a US$1.5 trillion tax cut package to boost productivity.

(SD-Agencies)