Strong US business spending on equipment is seen as support for GDP growth in Q3



FILE PHOTO: Containers in Ports of Los Angeles and Long Beach


© Reuters/Bob Riha Jr
FILE PHOTO: Containers in Ports of Los Angeles and Long Beach

By Lucia Mutikani

WASHINGTON, Sept 27 (Reuters) – New orders and shipments of key US-made capital goods rose solidly in August amid strong demand for computers and electronics, keeping business spending on equipment at a low on the way to another quarter of solid growth.

The sustained strength of business investment is expected to limit the impact on economic growth of an anticipated slowdown in consumer spending in the third quarter, as momentum from fiscal stimulus wears off and COVID-19 infections rise.

Demand for goods is being driven by companies desperate to replenish inventories, but strained supply chains remain a challenge.

“The outlook for investment in business equipment remains bright, and the latest business surveys suggest that growth will remain close to the pace seen in recent quarters,” said Michael Pearce, senior economist at Capital Economics in New York.

“Investment resilience is one of the reasons we expect overall GDP growth to slow marginally in the third quarter, despite a further drop in consumption growth,” he added.

Non-defensive capital goods orders, excluding aviation, a closely watched indicator of business spending plans, rose 0.5% last month, the Commerce Department said on Monday.

The July date was revised up to show that the so-called underlying capital goods orders increased by 0.3% instead of the 0.1% previously reported. Economists polled by Reuters had forecast that underlying capital goods orders would rise 0.4%.

Orders jumped 16.4% on a year-over-year basis and are 18% above their pre-pandemic level. That’s driving manufacturing, which accounts for 11.9% of the economy, although acute shortages of labor and raw materials like semiconductors make it difficult for factories to comply.

Last month, orders for computers and electronics rose 1.4%. There were also increases in orders for household appliances and electrical equipment and components, as well as manufactured metal products.

GRAPHIC: Durable Goods https://tmsnrt.rs/3EVNFpj

GRAPH: Underlying Capital Assets https://tmsnrt.rs/3zKBVCh

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(Edited in Spanish by Carlos Serrano)

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