WASHINGTON: New orders for key US-made capital goods increased more than expected in September and shipments rose for an eighth straight month, pointing to robust business spending that should help to mitigate the impact on the economy from the hurricanes.
Other data on Wednesday showed new single-family home sales vaulting to a near 10-year high last month. The signs of strong business investment on equipment in the third quarter and a pick-up in the housing market supported views the Federal Reserve will increase interest rates in December.
“The positive reports keep the economy’s wheels turning, and the Fed on track for another rate hike this year,” said Chris Rupkey, chief economist at MUFG in New York. “Businesses don’t invest in the future if they don’t think consumers will be there to buy their goods and services.”
The Commerce Department said non-defence capital goods orders excluding aircraft, a closely watched proxy for business spending plans, rose 1.3 per cent last month after an upwardly revised 1.3 per cent increase in August.
Economists had forecast orders of these so-called core capital goods increasing 0.5 per cent last month after a previously reported 1.1 per cent jump in August. Core capital goods orders advanced 3.8 per cent year-on-year.
Shipments of core capital goods climbed 0.7 per cent after soaring 1.2 per cent in August. Core capital goods shipments are used to calculate equipment spending in the government’s gross domestic product measurement.
Core capital goods shipments have now increased for eight straight months. Business investment on equipment stumbled in late 2015 and much of last year as declining oil prices hurt profits. Spending is in part being supported by a weakening dollar, strengthening global growth and steady oil prices.
— Reuters
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