U.S. business investments fall but consumer confidence, new home sales remained upbeat

(Reuters) – U.S. business investment spending fell for a fourth straight month in December, a sign that slowing global growth may be weighing on the economy, but consumers remained upbeat and new home sales in December hit their highest level since June 2008.

“The drop in (capital spending) will weigh on growth, though stronger consumer spending should keep GDP from slowing too much,” said Chris Low, chief economist at FTN Financial in New York.

The Commerce Department said non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, dropped 0.6 percent last month after a similar decline in November. Orders for these so-called core capital goods started falling in September, the longest downward stretch since 2012.

Economists, who had expected a 0.5 percent gain, said the surprise d

rop last month likely reflected weak overseas demand for a wide range of U.S. capital goods and declining demand at home for energy-related equipment.

A strengthening U.S. dollar may also have been a factor, analysts said. The dollar gained 12.8 percent last year and is up 4.2 pct so far in 2015 against a basket of currencies, making U.S. exports more expensive.

The dour business investment report came as construction and mining equipment maker Caterpillar Inc (CAT.N) reported a nearly 25 percent decline in fourth-quarter profit and warned that falling oil prices would hurt its business in 2015.

A number of U.S. oil producers already have curtailed drilling activity and announced job cuts after crude oil prices fell about 60 percent since June.

U.S dollar strength is also undermining corporate profits. Procter & Gamble Co (PG.N), the world’s largest household products maker, said full-year sales were likely to fall 3.0 to 4.0 percent, due to the rising dollar. Microsoft Corp (MSFT.O) on Monday said the dollar was a factor behind a decline in its quarterly earnings as well.

U.S. stock prices ended lower with the S&P 500 .SPX down 1.34 percent. The 30-year U.S. Treasury yield fell to a record low of 2.33 percent, and the U.S. dollar fell against a basket of major currencies .DXY.