US core capital goods orders unexpectedly fall in October
Non-defence capital goods orders excluding aircraft dropped 0.2% last month
NEW orders for key US-manufactured capital goods unexpectedly fell in October, suggesting a moderation in business spending on equipment this quarter.
Non-defence capital goods orders excluding aircraft, a closely watched proxy for business spending plans, dropped 0.2 per cent last month after a downwardly revised 0.3 per cent increase in September, the Commerce Department’s Census Bureau said on Wednesday (Nov 27).
Economists polled by Reuters had forecast these so-called core capital goods orders gaining 0.1 per cent after a previously reported 0.7 per cent advance in September. Core capital goods shipments rebounded 0.2 per cent after dipping 0.1 per cent in the prior month.
Business investment in equipment has mostly held up despite tighter monetary policy from the Federal Reserve to combat inflation, supported by an artificial intelligence boom.
The US central bank started cutting interest rates in September, which could keep spending underpinned.
Non-defence capital goods orders rebounded 1.4 per cent after slumping 3.5 per cent in September. Shipments of these goods fell 1.9 per cent after decreasing 3.8 per cent in the prior month.
Business investment in equipment notched hefty gains in the prior two quarters, contributing to the economy’s brisk growth pace over that period.
Orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, gained 0.2 per cent after falling 0.4 per cent in September.
They were lifted by a 0.5 per cent rise in orders for transportation equipment, which followed a 1.9 per cent decrease in September.
Motor vehicles and parts orders fell 0.4 per cent. Orders for commercial aircraft and parts increased 8.3 per cent after falling 16.6 per cent in the prior month. Boeing reported on its website that it had received 63 aircraft orders, down from 65 in September.
The orders included a significant number of the more expensive Dreamliner and cargo aircraft.
Commercial aircraft shipments dropped 11.8, likely depressed by a recently ended seven-week strike at Boeing’s West Coast factories, which halted production of its best-selling 737 MAX as well as 767 and 777 wide-body planes. Boeing has also been dogged by safety concerns. REUTERS
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