US core capital goods orders beat expectations in October

[WASHINGTON] New orders for key US-made capital goods increased more than expected in October, but momentum is slowing in line with expectations for slower economic growth in the fourth quarter.

Orders for non-defence capital goods excluding aircraft, a closely watched proxy for business spending plans, rose 0.7 per cent last month. These so-called core capital goods orders surged 1.9 per cent in September.

Economists polled by Reuters had forecast core capital goods orders increasing 0.5 per cent. Core capital goods orders rose 0.2 per cent year-on-year in October.

Orders last month were supported by demand for electrical equipment, appliances and components, computers and electronic products, primary metals and fabricated metal products. But orders for machinery fell.

Shipments of core capital goods jumped 2.3 per cent last month. Core capital goods shipments are used to calculate equipment spending in the government's gross domestic product measurement. They rose 0.7 per cent in September.

Business investment on equipment rebounded strongly in the third quarter after five straight quarterly declines. Economists expect slower economic growth after a historic pace of expansion in the third quarter.

The economy grew at a 33.1 per cent rate in the July-September quarter after contracting at a 31.4 per cent pace in the second quarter, the deepest since the government started keeping records in 1947. Growth estimates for the fourth quarter are below a 5 per cent rate.

Orders for durable goods, items ranging from toasters to aircraft that are meant to last three years or more, increased 1.3 per cent in October after racing up 2.1 per cent in September.

Durable goods orders were lifted by a 1.2 per cent increase in orders for transportation equipment, which followed a 3.3 per cent jump in September. Orders for motor vehicles and parts fell 3.2 per cent.

Orders for civilian aircraft increased 38.8 per cent. There had been no civilian aircraft orders for three straight months.

REUTERS