According to the Wall Street Journal, American businesses stepped up their spending going into the New Year, propelled by an economic upswing that has yet to lift much of the housing market.
New orders for U.S. durable goods—those lasting longer than three years, such as automobiles and kitchen appliances—rose 3% in December from November, the Commerce Department said. The data suggest that business spending on equipment climbed for the first time in three months, indicating renewed confidence among companies.
While the housing market has much ground to regain, corporations are poised to boost production in coming months, powering the U.S. recovery as other parts of the world slow down. Several factors are at play. Demand for automobiles has taken off as Americans who put off purchases during the recession and early in the recovery are now replacing cars and buying new ones. In addition, manufacturers—who saw business slow over the summer—say demand is picking up.
The durable-goods numbers, along with indicators of a brighter outlook among employers, signal pockets of strength in the American economy even as Asia loses momentum and the euro zone teeters toward recession. There were gains in every major category, from primary metals to machinery, with the exceptions being electrical equipment and defense products. Orders for nondefense capital goods excluding aircraft—a proxy for business spending—rose 2.9%, after two months of declines.
Overall, good news for the recovery.