AI Boom Fuels U.S. Manufacturing and Housing Market Amid Economic Growth

U.S. manufacturing sees a surge in capital goods orders driven by AI investment, fostering solid economic growth. The housing market shows mixed signals with increased single-family starts amidst rising material costs due to tariffs. Economists foresee sustained economic momentum due to tech investments and easing mortgage rates.

New orders for key U.S.-manufactured capital goods have recorded significant increases in December, with shipments booming, hinting at a robust business investment in equipment and growth in the economy during the fourth quarter. Economists attribute this surge to an ongoing boom in artificial intelligence investment.

Adding to this optimism, factory production showed an increase in January, although December's figures were adjusted downward. AI investment continues to support manufacturing segments, and experts predict tax cuts and relief in interest rates could spur investment beyond tech-related sectors, according to Oxford Economics' lead U.S. economist, Bernard Yaros.

In the housing sector, mixed results were reported. Single-family housing starts increased, but tariffs have pushed material costs higher, limiting activity. Despite new policies from the Trump administration to improve housing affordability, more housing supply is essential, especially as constraints on land and construction costs remain high.

(With inputs from agencies.)