Demand for expensive products, including production machinery, surged in December.  The increase in demand was much bigger than expected and covered a wide variety of products. The boost in demand hinted at some optimism by businesses about the economy.

Orders for durable goods rose by 5.2% last month to a seasonally adjusted $226.60 billion, the U.S. Commerce Department reported. Durables, which are goods designed to last at least three years, rose 0.5% in November, revised from a previously estimated 0.1% decrease.

Wall Street analysts expected a smaller increase in durable goods orders during December, while some economists were predicting an advance of 2.1%.

Recent data has suggested that the economy weakened during the end of 2007.  During a slowdown, businesses traditionally reduce their spending on new equipment. But the Commerce Department’s latest statistics showed a key yardstick of business equipment spending--orders for nondefense capital goods excluding aircraft--increased in December by 4.4%, after falling 0.2% in November.

Comparing year-to-year data, orders were down 1.5%. December shipments for nondefense capital goods excluding aircraft rose by 2.0%, after increasing 0.2% in November.  These shipments figures are used to calculate gross domestic product, which is the chief measure for economic growth in the U.S.

Demand during December for durable goods in the transportation sector increased 11%, after rising 2.7% in November. Orders for commercial aircraft rose 12%, while military airplane orders more than doubled. Motor vehicles and parts orders were down by 2.3% last month.

Demand for all durable goods except transportation equipment increased 2.6% in December. Some data on orders in other key sectors: orders climbed 2.8% for fabricated metals, 7.6% for machinery, and 4.6% for computers and electronics.

Go here for the U.S. Commerce Department’s latest statement:

http://www.census.gov/indicator/www/m3/