WASHINGTON (Reuters) - New orders for U.S.-made capital goods increased more than expected in December amid rising demand for machinery and electrical equipment, suggesting the oil-related drag on manufacturing was fading.

The Commerce Department said on Friday that non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, increased 0.8 percent after an upwardly revised 1.5 percent gain in November.

Economists polled by Reuters had forecast these so-called core capital goods rising 0.5 percent after a previously reported 0.9 percent increase in November.

Shipments of core capital goods jumped 1.0 percent last month after rising 0.6 percent in November. Core capital goods shipments are used to calculate equipment spending in the government's gross domestic product measurement.


The data was included in the fourth-quarter GDP report released on Friday. The economy grew at a 1.9 percent annualized rate in the fourth quarter after growing at a 3.5 percent pace in the third quarter.

Business investment shifted into higher gear in the fourth quarter, with spending on equipment increasing at a 3.1 percent rate after four straight quarterly declines.

(Reporting by Lucia Mutikani; Editing by Paul Simao)