) -- New orders for durable goods rose for the fourth consecutive month in January led by demand for aircraft, the Commerce Department said early Thursday.

Durable goods orders rose 2.7% in January, in line with consensus estimates. Excluding the volatile transportation, however, orders fell 3.6%, significantly worse than expectations. Economists were expecting a 0.6% increase in orders excluding transportation. Excluding defense, new orders increased 1.5%.

Demand for transportation equipment rebounded strongly in January, rising 27.6% to $50.5 billion after three consecutive monthly declines. This was led by an increase in orders for nondefense aircraft and parts by $7.3 billion.

New orders for machinery, computer and electronic products and communications equipment, however, fell sharply.

Weather may have impacted non-transportation durable goods orders in January. Ian Shepherdson of High Frequency Economics notes that severe weather in January 1996 and January 1999 impacted durable goods orders excluding transportation by 3.3% and 3.5% respectively.

Shipments and unfilled orders showed relative strength, while inventories rose for the 13th consecutive month.

Nondefense new orders for capital goods rose 4.6% to $66.3 billion. Nondefense capital goods orders closely mirror the GDP's category of producers' durable goods equipment- the largest component of business investments.

--Written by Shanthi Bharatwaj in New York

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