New orders for key U.S.-made capital goods increased in number more than expected in August and shipments maintained their upward trend, pointing to underlying strength in the economy despite an anticipated drag to growth from Hurricanes Harvey and Irma.
Figures released Wednesday by the U.S. Commerce Department revealed non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, rose 0.9% last month after an upwardly revised 1.1% gain in July.
Economists had forecast orders of these so-called core capital goods increasing 0.3% last month after a previously reported 1% increase in July. Core capital goods orders surged 3.3% year-on-year.
Shipments of core capital goods rose 0.7% after advancing 1.1% in July. Core capital goods shipments are used to calculate equipment spending in the government's gross domestic product measurement.
The department said it was unable to isolate the effects of Hurricanes Harvey and Irma on the data as the survey is "designed to estimate the month-to-month change in manufacturing activity at the national level and not at specific geographic areas."
Harvey, which devastated parts of Texas, has hurt August retail sales, industrial production, homebuilding and home sales. As a result, the storms are expected to weigh on third-quarter economic growth.
Business investment has been buoyed by the energy sector, where oil and gas drilling has rebounded after declining in the wake of a collapse in crude oil prices.
That is helping to support manufacturing, which accounts for about 12% of the U.S. economy.