Tags: durable goods | business spending | economy | orders

Business Spending Index Falls Amid Weak Durable Goods Orders

Business Spending Index Falls Amid Weak Durable Goods Orders
(Dollar Photo Club)

Tuesday, 27 October 2015 08:43 AM EDT

A gauge of U.S. business investment plans fell for a second straight month in September, the latest indication that economic growth braked sharply in the third quarter.

The Commerce Department said on Tuesday non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, slipped 0.3 percent last month after a downwardly revised 1.6 percent decline in August.

Economists polled by Reuters had forecast these so-called core capital goods unchanged after a previously reported 0.8 percent drop in August.

Manufacturing has been hobbled by a strong dollar and spending cuts in the energy sector. Manufacturing, which accounts for about 12 percent of the economy, has also been hit by efforts by businesses to reduce an inventory bulge and by slowing global demand.

The downbeat report added to weak trade, retail sales and industrial production data that have suggested the economy lost significant momentum in the third quarter.

According to a Reuters survey of economists, gross domestic product likely expanded at a 1.6 percent annual rate in the third quarter, slowing from a brisk 3.9 percent pace in the second quarter. The government will publish its advance third-quarter GDP estimate on Thursday.

The dollar has gained 15.4 percent against the currencies of the United States' main trading partners since June 2014, undermining the profits of multinational companies like Procter & Gamble Co. and 3M Co..

A plunge in oil prices has squeezed revenues for oil field companies like Schlumberger and diversified manufacturer Caterpillar Inc.

The continued weakness in business spending, together with signs of a slowdown in hiring by companies, could raise further doubts on whether the Federal Reserve will raise interest rates this year. The U.S. central bank's policy-setting committee was due to convene a two-day meeting on Tuesday.

Shipments of core capital goods, which are used to calculate equipment spending in the government's gross domestic product measurement, rose 0.5 percent last month after a downwardly revised 0.8 percent drop in August.

Core capital goods shipments were previously reported to have dropped 0.4 percent in August.

A 2.9 percent decline in transportation equipment spending also helped to weigh down overall orders for durable goods - items ranging from toasters to aircraft that are meant to last three years or more - which fell 1.2 percent last month.

Transportation was dragged down by a 35.7 percent decline in aircraft orders. Boeing reported on its website that it had received only 29 orders last month, down from 52 aircraft in August. Orders for automobiles and parts rebounded 1.8 percent.

© 2025 Thomson/Reuters. All rights reserved.


Economy
A gauge of U.S. business investment plans fell for a second straight month in September, the latest indication that economic growth braked sharply in the third quarter.
durable goods, business spending, economy, orders
420
2015-43-27
Tuesday, 27 October 2015 08:43 AM
Newsmax Media, Inc.

Sign up for Newsmax’s Daily Newsletter

Receive breaking news and original analysis - sent right to your inbox.

(Optional for Local News)
Privacy: We never share your email address.
Join the Newsmax Community
Read and Post Comments
Please review Community Guidelines before posting a comment.
 
Get Newsmax Text Alerts
TOP

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved
NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved