WASHINGTON -- Demand for long-lasting factory goods fell in January and a widely watched proxy for U.S. business investment dropped for the second straight month, offering one of the first indications of how business owners may be responding to extra cash and incentives offered in the Trump administration's tax overhaul. Overall orders for durable goods, manufactured products intended to last at least three years, declined a seasonally adjusted 3.7% in January from the prior month, the Commerce Department said Tuesday. Economists surveyed by The Wall Street Journal had expected a 1.6% decline. Orders for transportation equipment, a more volatile component of the measure, largely drove the headline decline, falling 10%. The business-investment gauge, new orders for non-defense capital goods excluding aircraft, shrank 0.2% in the first month of 2018 from December. January's decline came on the heels of a tax overhaul passed in late 2017 that aimed to rev up investment by firms. Many economists expect overall U.S. economic growth will be healthy in 2018, bolstered by the recent tax-law changes. In December, the business-investment measure also fell from the prior month. But more broadly it has been rising steadily. It was up 8% in January from a year earlier. Other recent reports suggest a pickup in capital spending. According to a report this month by the Federal Reserve, manufacturing production of business equipment rose 4.8% in January from the prior year and 4.9% in November from a year earlier, two of the largest annual gains in about four years. A private-sector gauge of manufacturing activity produced by the Institute for Supply Management touched its highest level in more than a decade in 2017. The lead time for filling capital-expenditure orders rose 8% during January because factories were being flooded with new orders, said Tim Fiore, who oversees the ISM survey. Business investment rebounded in 2017 after stagnating for two years. The trend appeared to parallel the price of crude oil, suggesting much of the slowdown in spending and subsequent renewed investment was concentrated in energy-related industries. Tuesday's report also showed new orders for primary metals and machinery falling by the largest margin in about a year and a half. The Commerce Department's durable goods orders report can be found at http://www.census.gov/manufacturing/m3.