U.S. core capital goods orders unexpectedly fall in September

WASHINGTON (Reuters) – New orders for U.S.-made capital goods unexpectedly fell in September, the Commerce Department said on Thursday, suggesting a loss of momentum in business spending on equipment at the end of the third quarter.

Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, dropped 0.7% during the month, the department said. These so-called core capital goods orders increased 0.8% in August.

Economists polled by Reuters had forecast core capital goods orders rising 0.5%. The data is not adjusted for inflation.

Core capital goods shipments slipped 0.5% after advancing 0.2% in August. Core capital goods shipments are used to calculate equipment spending in the gross domestic product measurement.

The data was included in Thursday’s advance third-quarter GDP report, which showed business spending on equipment rebounding sharply after contracting in the second quarter. The overall economy rebounded after two straight quarterly declines, largely driven by a smaller trade deficit.

The Federal Reserve’s aggressive interest rate hikes as it fights inflation are curbing demand for goods and slowing manufacturing which accounts for 11.3% of the economy. Dollar strength as a result of tighter monetary policy is also hurting manufacturing, as well an emerging inventory overhang.

Manufacturing output rose at a 1.9% annualized rate in the third quarter after increasing at a 3.2% pace in the second quarter, data from the Fed showed last week.

Orders for items ranging from toasters to aircraft that are meant to last three years or more gained 0.4% in September after climbing 0.2% in August. They were lifted by a 2.1% jump in orders for transportation equipment, which followed a 0.6% increase in August.

Motor vehicle orders accelerated 2.2%. Orders for the volatile civilian aircraft category soared 21.9% after falling 8.6% in August.

Boeing (NYSE:) said on its website it had received 96 aircraft orders last month, compared to 30 in August.

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