WASHINGTON (Reuters) – New orders for U.S.-made capital goods increased in July, but momentum has slowed from prior months, suggesting that business spending on equipment could struggle to rebound after contracting last quarter.
Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, rose 0.4% last month, the Commerce Department said on Wednesday. These so-called core capital goods orders increased 0.9% in June.
Economists polled by Reuters had forecast core capital goods orders would gain 0.3%.
Core capital goods shipments climbed 0.7% after advancing 0.8% in June. Core capital goods shipments are used to calculate equipment spending in the gross domestic product measurement.
Orders are slowing as the Federal Reserve’s aggressive monetary policy campaign to fight inflation dampens demand. Still manufacturing, which accounts for 11.9% of the economy, remains supported by still-low inventories of long-lasting manufactured goods like motor vehicles.
Business spending on equipment declined at a 2.7% annualized rate in the second quarter, the most in two years. That, together with a slower pace of inventory accumulation relative to the prior two quarters, helped to weigh down GDP. The economy contracted 1.3% in the first half of the year.
(Reporting by Lucia Mutikani; Editing by Nick Zieminski)
