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US business equipment orders point to firm investment
NEW orders for key US-made capital goods increased more than expected in July and growth in shipments held firm, signalling that business investment started the third quarter on a strong note.
The Commerce Department said on Friday orders for non-defence capital goods excluding aircraft, a closely watched proxy for business spending plans, rose 1.4 per cent last month after an upwardly revised 0.9 per cent increase in June. "That provides further reason to think that overall GDP has continued to expand at a healthy pace," said Andrew Hunter, an economist at Capital Economics.
Business spending on equipment is being supported by the Trump administration's US$1.5 trillion income tax cut package, which came into effect in January. But there are worries that trade tensions between the United States and its major trade partners, including China, Canada, Mexico and the European Union, could offset the fiscal stimulus.
Economists polled by Reuters had forecast the so-called core capital goods orders rising 0.4 per cent in July after a previously reported 0.2 per cent gain in June. Core capital goods orders increased 7.2 per cent on a year-on-year basis. REUTERS