New orders for U.S.-made capital goods rose more than expected in August, signaling a rebound in business spending on equipment in the third quarter, but the growth in orders also partly reflected higher prices.
Orders for non-defense capital goods, excluding aircraft, a closely watched measure of business spending, surged 1.3 percent in August, the Commerce Department said on Tuesday. Those so-called core capital goods orders rose 0.7% in July. The data is not adjusted for inflation.
Economists had forecast a 0.2 percent rise in orders for core capital goods.
Shipments of core capital goods rose 0.3% after climbing 0.6% in July. Core capital goods shipments are used to calculate equipment spending in gross domestic product (GDP).
Data this month showed U.S. factory output barely rose in August as the Fed adopted aggressive monetary tightening to fight inflation.
The Fed last week raised its policy rate by 75 basis points, the third time in a row that it has raised rates by that amount. This bodes well for even greater growth this year.
Equipment business spending fell the most in two years in the second quarter.