US capital goods orders increase for a seventh straight month

[WASHINGTON] Orders placed with US factories for business equipment rose in September for a seventh straight month, pointing to ongoing strength in capital investment.

The value of core capital goods orders, a proxy of business investment in equipment that excludes aircraft and military hardware, rose 0.8 per cent after a revised 0.5 per cent increase a month earlier, Commerce Department figures showed Wednesday. Bookings for all durable goods - or items meant to last at least three years - decreased 0.4 per cent from the prior month, reflecting declines in aircraft and cars.

The median estimate in a Bloomberg survey of economists called for a 0.5 per cent increase in core capital goods orders and a 1.1 per cent drop in total durables. Stronger demand against a backdrop of limited capacity have pushed the value of core equipment spending to record levels and helped fuel economic growth in the first half of this year. Still, ongoing supply bottlenecks and labour shortages have limited producers' ability to make headway on bookings, as unfilled orders for capital goods have climbed to a record.

Commercial Aircraft Bookings for commercial aircraft decreased almost 28 per cent. Boeing earlier reported 27 orders in September, down from 53 a month earlier. The government's data aren't always directly comparable on a month-to-month basis.

Orders for motor vehicles dropped for a second month. Durable goods orders excluding transportation equipment increased 0.4 per cent.

Outside of the volatile aircraft category, orders for machinery and metals increased. Meantime, bookings for communications equipment, computers and electrical equipment decreased in September. Core capital goods shipments, a figure that will be used to calculate investment in the government's third-quarter gross domestic product report released Thursday, jumped 1.4 per cent. That was the biggest gain in six months.

Orders for defence capital goods, which are a volatile component, surged 28.4 per cent and reflected a jump in military aircraft. Total durable goods bookings minus military equipment fell 2 per cent.

Unfilled orders for manufactured durable goods climbed 0.7 per cent, while inventories increased 0.9 per cent for a second month. The backlog underscores the ongoing production constraints and long lead times faced by manufacturers.

BLOOMBERG