Washington: Orders for US business equipment fell in September by the most in seven months, indicating corporate investment is having trouble gaining traction.
Bookings for non-military capital goods excluding aircraft dropped 1.2 per cent, erasing a 1.2 per cent August gain that was stronger than previously reported, Commerce Department data showed Thursday. The median forecast of economists surveyed by Bloomberg called for a 0.1 per cent drop. Demand for all durable goods eased 0.1 per cent.
Business investment remained slow in the third quarter as moderating demand and weakness overseas prompted companies to hold back. Even with stability in the oil sector, an inventory correction and growth in consumer spending, manufacturing will probably see little more than a gradual improvement.
“Business investment has been mired in a slump for more than a year and there’s nothing in these numbers to suggest it’s about to break out,” said Omair Sharif, senior US economist at Societe Generale in New York. “It’ll still be a small drag on third-quarter growth.”
Orders declined for fabricated and primary metals, computers and electronics, and communications equipment.
The drop in bookings for all durable goods last month followed a 0.3 per cent August advance that was better than previously reported.
Orders for non-defence capital goods excluding aircraft are a proxy for future business investment in items like computers, engines and communications gear. Even with the decline, bookings over the three months ended in September rose at a 5.2 per cent annualised pace, indicating the worst of the investment slump is over.
Nonetheless, shipments of those goods, which are used in calculating gross domestic product, fell an annualised 4.4 per cent in the three months ended in September. They were up 0.3 per cent from a month earlier after little change in August. Compared with a year earlier, sales of capital equipment were down 5.2 per cent.
On Friday, the Commerce Department will issue its first estimate of third-quarter GDP.
The durables report also showed bookings for non-military aircraft rose 12.5 per cent following a 24.2 per cent decrease.
Boeing Co., the Chicago-based aerospace company, said it received 55 orders for aircraft in September, up from 22 in August. Deliveries for the month rose to 72 from 59.
Durable goods orders excluding transportation equipment, which are often volatile from month to month, climbed 0.2 per cent after a 0.1 per cent gain.
Bookings for military capital equipment decreased 7.7 per cent, and demand for non-defence durable goods rose 0.7 per cent.
Durable goods inventories crept up 0.1 per cent for a second month, while unfilled orders for non-defence capital goods excluding aircraft rose 0.2 per cent.
