US core capital goods orders rise modestly in November
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NEW orders for US-made capital goods rose moderately in November while shipments fell, pointing to a slowdown in business spending on equipment this quarter as higher borrowing costs cool demand for goods.
Orders for non-defence capital goods excluding aircraft, a closely watched proxy for business spending plans, rose 0.2 per cent last month, the Commerce Department said on Friday (Dec 23). These so-called core capital goods orders increased 0.3 per cent in October.
Economists polled by Reuters had forecast that core capital goods orders would be unchanged. Core capital goods increased 8.8 per cent on a year-on-year basis in November.
The data is not adjusted for inflation. Slowing price increases, a strong US dollar and a shift in spending from goods to services likely contributed to the moderation in core capital goods orders. That is hurting manufacturing, which accounts for 11.3 per cent of the economy.
There were increases in orders for machinery, computers and electronic products as well as electrical equipment, appliances and components. But primary metals orders slipped.
Shipments of core capital goods dipped 0.1 per cent after increasing 1.4 per cent in October. Core capital goods shipments are used to calculate equipment spending in the gross domestic product measurement.
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Business spending on equipment contributed to the economy’s 3.2 per cent annualised growth pace in the third quarter. The Federal Reserve last week hiked its policy rate by 50 basis points to a range of 4.25 per cent-4.50 per cent, the highest since late 2007. US central bank officials expect the rate to rise to between 5.00 per cent and 5.25 per cent next year, a level that could be sustained for a while.
Orders for items ranging from toasters to aircraft that are meant to last three years or more dropped 2.1 per cent in November after rising 0.7 per cent in October.
They were weighed down by a 6.3 per cent decrease in orders for transportation equipment, which followed a 1.9 per cent increase in October. Motor vehicle orders slipped 0.1 per cent. Orders for the volatile civilian aircraft category plunged 36.4 per cent. REUTERS
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