WASHINGTON- New orders for US-made capital goods increased to a record high in September and shipments surged, pointing to strong business spending on equipment, though stretched supply chains likely hampered overall economic growth in the third quarter.
Slower growth expectations were reinforced by other data from the Commerce Department on Wednesday showing the goods trade deficit widening sharply last month, with exports slumping. While wholesale inventories increased, stocks at retailers fell as supply at auto dealerships continued to decrease rapidly amid a global semiconductor shortage.
The reports, which came ahead of the government’s snapshot of third-quarter gross domestic product on Thursday, had some economists ratcheting down their growth estimates. The economy is believed to have expanded at the slowest pace since the second quarter of 2020, when it suffered a historic contraction in the wake of stringent mandatory measures to contain the first wave of COVID-19 infections.
“The third quarter may be the weakest quarter for economic growth in over a year, but you would never know it looking at business capital spending setting records this month,” said Christopher Rupkey, chief economist at FWDBONDS in New York. “Business is looking past the slowdown in consumer spending in the third quarter and betting consumers will return to the shops and malls later this year and clear the shelves.”
Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, rose 0.8 percent last month to an all-time high. These so-called core capital goods orders advanced 0.5 percent in August. Economists polled by Reuters had forecast core capital goods orders gaining 0.5 percent.
There were increases in orders for machinery, primary metals and fabricated metals products. But orders for electrical equipment, appliances and components fell as did those for computers and electronic products, likely because of the worldwide chip shortage. – Reuters
