US core capital goods orders beat expectations in September
Non-defence capital goods orders dropped 4.5% after declining 4.4% in August
NEW orders for key US-manufactured capital goods increased more than expected in September, but business spending on equipment likely slowed in the third quarter.
Non-defence capital goods orders excluding aircraft, a closely watched proxy for business spending plans, jumped 0.5 per cent last month after an unrevised 0.3 per cent gain in August, the Commerce Department’s Census Bureau said on Friday (Oct 25).
Economists polled by Reuters had forecast these so-called core capital goods orders edging up 0.1 per cent after a previously reported 0.3 per cent rise in August. Core capital goods shipments fell 0.3 per cent after dipping 0.1 per cent in the prior month.
Higher borrowing costs have been a constraint on business investment, though a loosening of financial conditions as the Federal Reserve prepared to cut interest rates boosted spending on equipment in the second quarter.
Non-defence capital goods orders dropped 4.5 per cent after declining 4.4 per cent in August. Shipments of these goods dropped 3.6 per cent after falling 2.0 per cent in the prior month.
These shipments go into the calculation of the business spending on equipment component in the gross domestic product report. Business investment in equipment rose at a brisk 9.8 per cent annualised rate in the second quarter, contributing to the economy’s 3.0 per cent growth pace.
Growth estimates for the July-September quarter are currently as high as a 3.4 per cent rate. The government will publish its advance estimate of third-quarter GDP next week. REUTERS
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