Orders for U.S. Business Equipment Barely Rise Ahead of Election
Bookings for all durable goods—items meant to last at least three years—stalled on fewer orders for commercial aircraft.
Orders placed with U.S. factories for business equipment rose slightly in August, suggesting firms are limiting investment ahead of the election and further declines in borrowing costs.
The value of core capital goods orders, a proxy for investment in equipment excluding aircraft and military hardware, increased 0.2 percent last month after a drop of the same magnitude in July, Commerce Department figures showed Thursday. The data aren’t adjusted for inflation.
Bookings for all durable goods—items meant to last at least three years—stalled on fewer orders for commercial aircraft. Excluding transportation equipment, orders climbed 0.5 percent.
Though many businesses are still committed to making long-term investments, uncertainty about the November presidential election and future demand has caused firms to be cautious about expansion plans. That suggests factory production may struggle for momentum in the coming months.
At the same time, the likelihood of cheaper financing costs in the coming year after the Federal Reserve cut interest rates by a half percentage point this month could help bolster demand and encourage companies to move forward on investment plans.
Core capital goods shipments, a figure that is used to help calculate equipment investment in the government’s gross domestic product (GDP) report, climbed 0.1 percent after falling 0.4 percent in July. Before the report, the Atlanta Fed’s GDPNow forecast penciled in an increase in business equipment spending for the third quarter.
Separate data on Thursday showed outlays for business equipment increased at a nearly 10 percent annualized rate in the second quarter. That, along with a pickup in consumer spending, helped fuel a 3 percent annualized increase in GDP during the period.
| Metric | Actual | Estimate |
|---|---|---|
| Durable goods orders | +0.0% | -2.6% |
| Capital goods orders excluding defense & aircraft | +0.2% | +0.1% |
| Capital goods shipments, excluding defense & aircraft | +0.1% | +0.1% |
The Commerce Department’s durable goods report showed commercial aircraft bookings, which are volatile from month to month, dropped 7.5 percent after rebounding in July.
Boeing Co. reported 22 orders in August, down from 72 a month earlier. A debilitating strike by Boeing workers has shut down factories across the Pacific Northwest for more than a week, and union negotiators cast aside the possibility of a swift resolution to the impasse.
While often helpful to compare the two, aircraft orders are volatile and the government data don’t always correlate with the planemaker’s monthly figures.
Recent purchasing managers surveys illustrate a struggling manufacturing sector. The Institute for Supply Management’s manufacturing gauge contracted for a fifth straight month in August, while the S&P Global manufacturing September index declined to the lowest level since June 2023.
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