US Core Capital Goods Orders Rise, Inflation Expectations Improve
Source: US News and World Report/Reuters
May 24, 2024, at 8:45 a.m.
WASHINGTON (Reuters) - New orders for key U.S.-manufactured capital goods rebounded more than expected in April and shipments of those goods also increased, suggesting a moderate improvement in business spending on equipment early in the second quarter.
Nonetheless, business investment on equipment continues to be hamstrung by higher borrowing costs. That, together with a strong dollar and weak global demand, is keeping manufacturing, which accounts for 10.4% of the economy, on the ropes.
"Despite elevated borrowing costs and stricter loan standards, U.S. business investment could pick up in the second quarter," said Sal Guatieri, a senior economist at BMO Capital Markets. "However, the manufacturing sector, as a whole, is expected to remain in low gear until interest rates ease, the greenback weakens, and the global economy strengthens."
Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, rose 0.3% last month after an upwardly revised 0.1% dip in March, the Commerce Department's Census Bureau said on Friday. Economists polled by Reuters had forecast these so-called capital goods orders would edge up 0.1% after declining by a previously reported 0.2% in March.
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