US core capital goods orders beat expectations in September
2024.10.25 09:04
WASHINGTON (Reuters) – New orders for key U.S.-manufactured capital goods increased more than expected in September, but business spending on equipment likely slowed in the third quarter.
Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, jumped 0.5% last month after an unrevised 0.3% gain in August, the Commerce Department’s Census Bureau said on Friday.
Economists polled by Reuters had forecast these so-called core capital goods orders edging up 0.1% after a previously reported 0.3% rise in August. Core capital goods shipments fell 0.3% after dipping 0.1% 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-defense capital goods orders dropped 4.5% after declining 4.4% in August. Shipments of these goods dropped 3.6% after falling 2.0% 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% annualized rate in the second quarter, contributing to the economy’s 3.0% growth pace.
Growth estimates for the July-September quarter are currently as high as a 3.4% rate. The government will publish its advance estimate of third-quarter GDP next week.
