In the largest increase in over a year, the month of January saw US companies purchasing machinery and factory goods at a rate of increase of 7.2 percent over December’s figures. This number, despite fears of tax hikes and sequestration (budget cuts), registers among economists as a sign of increasing confidence in the US economy.
Increased capital purchases, especially long after the holidays have passed, bodes well for the economy, as it’s a sign that production is pushing ahead, with a hoped-for increase in jobs and decrease in unemployment.
Aircraft and defense orders are not included in these figures. If sequestration causes the Defense Department to slash its budget, then this sector could adversely affect the economy as a whole. Because orders for aircraft fell in January the total factory orders in January was really down by 2 percent.