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 % after an upwardly revised 1.5 % gain in November.

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

Shipments of core capital goods jumped 1.0 % last month after rising 0.6 % 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 % annualized rate in the fourth quarter after growing at a 3.5 % pace in the third quarter.

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