US core capital goods orders unexpectedly rise in August

[WASHINGTON] New orders for key US-manufactured capital goods unexpectedly increased in August, but a decline in shipments of these goods suggested a moderate pace of growth in business spending on equipment this quarter.

Non-defence capital goods orders excluding aircraft, a closely watched proxy for business spending, rose 0.6 per cent last month after a downwardly revised 0.8 per cent jump in July, the Commerce Department’s Census Bureau said on Thursday (Sep 25).

Economists polled by Reuters had forecast these so-called core capital goods orders dipping 0.1 per cent after a previously reported 1.0 per cent surge in July. Some of the rise in orders likely reflects higher prices rather than increased volumes as tariffs on imported goods raise costs for manufacturers.

Shipments of core capital goods slipped 0.3 per cent after rising 0.6 per cent in July. Core capital goods orders have fluctuated within a wide band this year, surging as businesses rushed to bring in goods before President Donald Trump’s sweeping import duties kicked in, and declining as the front-loading abated.

Business spending on equipment slowed, albeit to a still-strong pace, in the second quarter following double-digit growth in the January-March quarter.

Orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, rebounded 2.9 per cent in August after falling 2.7 per cent in July. The increase was despite Boeing reporting on its website that it had received 26 aircraft orders compared with 31 in July. REUTERS