WASHINGTON (Reuters) - New orders for key U.S.-manufactured capital goods increased more than expected in December, but business spending on equipment was likely muted in the fourth quarter after a strike at Boeing ( BA ) disrupted aircraft deliveries.

Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, rose 0.5% after an upwardly revised 0.9% gain in November, the Commerce Department's Census Bureau said on Tuesday.

Economists polled by Reuters had forecast these so-called core capital goods orders climbing 0.3% after a previously reported 0.4% rise in November.

Shipments of core capital goods increased 0.6% after climbing 0.4% in November. Non-defense capital goods orders fell 7.8% after dropping 3.2% in November. Shipments of these goods increased 3.5% after falling 0.9% in the prior month.

These shipments go into the calculation of the business spending on equipment component in the gross domestic product report. A crippling strike by factory workers at Boeing ( BA ), which started in mid-September and ended in early November, disrupted production and delivery of aircraft.

Strong aircraft deliveries helped to boost business spending on equipment in the second and third quarters, despite higher interest rates undercutting manufacturing.

Economists believe that business spending on equipment was at best neutral to GDP last quarter. The government is scheduled to publish its first GDP growth estimate for the fourth quarter on Thursday. A Reuters survey of economists forecasts GDP increased at a 2.6% annualized rate last quarter.

The economy grew at a 3.1% pace in the July-September quarter. It is expanding well above the 1.8% rate that Federal Reserve officials regard as the non-inflationary growth pace.

The U.S. central bank is expected to leave its benchmark overnight interest rate in the 4.25%-4.50% range at the end of a two-day policy meeting on Wednesday, having reduced it by 100 basis points since September. The policy rate was hiked by 5.25 percentage points in 2022 and 2023.

Business sentiment perked up as President Donald Trump's electoral victory in November fanned hopes for tax cuts and a less stringent regulatory environment.

But the new administration's proposed immigration and trade policies have raised fears of a pickup in inflation that could limit the Fed's ability to continue cutting rates this year.