Durable goods are sold at a store in Los Angeles, California, on March 24, 2017.Reuters/Lucy Nicholson Obtaining license rights
WASHINGTON, Sept 27 (Reuters) – Orders for U.S. long-life products rose in August as a rise in machinery offset a decline in commercial aircraft, and corporate capital spending rose to some extent after sluggish early in the third quarter. seems to have regained its momentum.
But some of the unexpected increase in durable goods orders announced Wednesday by the Commerce Department likely reflects higher prices as inflation accelerated last month. Nevertheless, the report finds that despite the Federal Reserve’s aggressive monetary tightening policy, demand for goods has slowed and credit costs have risen for companies wishing to invest, the economy is He pointed out that the underlying strength of the company is solid.
“The U.S. economy has proven to be incredibly resilient,” said Priscilla Thiagamoorthy, senior economist at BMO Capital Markets in Toronto.
Orders for durable goods that last more than three years, from toasters to aircraft, rose 0.2% last month. July data has been revised downward to show orders for these products fell by 5.6% instead of the previously reported 5.2% decline.
Economists polled by Reuters had expected durable goods orders to fall by 0.5% last month. Orders in August increased by 4.2% compared to the same month last year.
Orders for machinery increased by 0.5%, and reservations for electrical equipment, home appliances and parts increased by 1.1%. Orders for computer and electronic products increased by 0.3%. Demand for processed metal products increased by 0.5%.
However, orders for primary metals fell by 0.6%. Transportation equipment orders fell by 0.2%, weighed down by a 15.9% decline in commercial aircraft bookings. Orders for automobiles and parts rose 0.3%. The data suggests that manufacturing, which accounts for 11.1% of the economy, continues to struggle despite research suggesting it is in recession.
The Institute for Supply Management’s manufacturing PMI has declined for 10 consecutive months, but the pace of decline has slowed in recent months.
The U.S. central bank will raise the overnight benchmark interest rate by 525 basis points starting in March 2022 to combat inflation, bringing it to the current range of 5.25% to 5.50%. Strikes by the United Auto Workers against General Motors (GM.N), Stellantis (STLAM.MI) and Ford Motor (FN) could put pressure on manufacturing.
Orders for non-defense capital goods, excluding aircraft, which are closely watched as an indicator of corporate spending plans, increased by 0.9%, after a downward revision of 0.4% in the previous month. These so-called core capital goods orders were previously reported to have increased slightly by 0.1% in July.
Core capital goods shipments recovered 0.7% from a 0.3% decline in July. Shipments of non-defense capital goods rose 1.2%, reversing the previous month’s decline.
These shipments are reflected in the calculation of capital expenditures in the Gross Domestic Product report. Economists were divided on whether the surge in shipments would lead to strong growth in capital spending in the third quarter.
Report by Lucia Mutikani.Editing: Andrea Ricci
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