US core capital goods orders unexpectedly fall in October

10:00 am Wednesday, November 27th, 2024

WASHINGTON (Reuters) – New orders for key U.S.-manufactured capital goods unexpectedly fell in October, suggesting a moderation in business spending on equipment this quarter.

Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, dropped 0.2% last month after a downwardly revised 0.3% increase in September, the Commerce Department’s Census Bureau said on Wednesday.

Economists polled by Reuters had forecast these so-called core capital goods orders gaining 0.1% after a previously reported 0.7% advance in September. Core capital goods shipments rebounded 0.2% after dipping 0.1% in the prior month.

Business investment in equipment has mostly held up despite tighter monetary policy from the Federal Reserve to combat inflation, supported by an artificial intelligence boom.

The U.S. central bank started cutting interest rates in September, which could keep spending underpinned.

Non-defense capital goods orders rebounded 1.4% after slumping 3.5% in September. Shipments of these goods fell 1.9% after decreasing 3.8% in the prior month.

Business investment in equipment notched hefty gains in the prior two quarters, contributing to the economy’s brisk growth pace over that period.

Orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, gained 0.2% after falling 0.4% in September.

They were lifted by a 0.5% rise in orders for transportation equipment, which followed a 1.9% decrease in September.

Motor vehicles and parts orders fell 0.4%. Orders for commercial aircraft and parts increased 8.3% after falling 16.6% in the prior month. Boeing reported on its website that it had received 63 aircraft orders, down from 65 in September.

The orders included a significant number of the more expensive Dreamliner and cargo aircraft.

Commercial aircraft shipments dropped 11.8, likely depressed by a recently ended seven-week strike at Boeing’s West Coast factories, which halted production of its best-selling 737 MAX as well as 767 and 777 wide-body planes. Boeing has also been dogged by safety concerns.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)