You are here
US core capital goods orders unexpectedly fall in August
[WASHINGTON] New orders for key US-made capital goods fell in August after four straight months of strong gains, while shipments barely rose, but that will probably not change expectations of solid growth in business spending on equipment in the third quarter.
The Commerce Department said on Thursday that orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, dropped 0.5 per cent last month, pulled down by a decline in demand for computers and electronic products.
There was also a decrease in motor vehicle orders. Data for July was revised slightly lower to show the so-called core capital goods orders increasing 1.5 per cent instead of the previously reported 1.6 per cent surge.
Economists polled by Reuters had forecast core capital goods orders rising 0.4 per cent last month. Core capital goods orders increased 7.4 per cent on a year-on-year basis.
Shipments of core capital goods edged up 0.1 per cent last month after an upwardly revised 1.1 percent gain in July. Core capital goods shipments are used to calculate equipment spending in the government's gross domestic product measurement. They were previously reported to have increased 1.0 percent in July.
With business confidence at multi-year highs, in part buoyed by a $1.5 trillion tax cut package, August's surprise drop in core capital goods orders is likely to be temporary. There are, however, fears that an escalating trade war between the United States and China could hurt confidence and undercut both consumer and business spending.
Business spending on equipment has risen since the fourth quarter of 2016. It is expected to underpin economic growth in the third quarter, even as trade is expected to weigh on output.
Overall orders for durable goods, items ranging from toasters to aircraft that are meant to last three years or more, surged 4.5 per cent in August as demand for transportation equipment jumped 13.0 per cent. That followed a 1.2 percent drop in durable goods orders in July.
Orders for motor vehicles and parts fell 1.0 percent last month. Orders for civilian aircraft soared 69.1 per cent last month. Boeing reported on it website that it had received 99 aircraft orders in August, up from 25 in July.