U.S. Capital Goods Orders Top Expectations

Newly released figures show new orders for key U.S.-made capital goods increased more than expected in August and demand for the prior month was stronger than previously estimated, all of which suggests a rebound in business spending on equipment south of the border was underway after a prolonged slump.

The upbeat report from the Commerce Department on Friday, however, did not change views that the economy’s recovery from the COVID-19 recession was slowing as government money to help businesses and tens of millions of unemployed Americans runs out. New coronavirus cases continue on the rise in some parts of the country, a sad fact which could crimp consumer spending, with retail sales already slowing.

The Commerce Department report also says orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, rose 1.8% last month. Data for July was revised up to show these so-called core capital goods orders increasing 2.5% instead of 1.9% as previously estimated.

Economists had forecast core capital goods orders gaining 0.5% in August.

Core capital goods orders last month were boosted by increased demand for machinery, primary metals, computers and electronic products. However, orders for fabricated metal products and electrical equipment, appliances and components fell.