Business-Equipment Orders Jump by Most Since Early 2018
[Stay on top of transportation news: Get TTNews in your inbox.]
Orders placed with U.S. factories for business equipment posted the biggest gain in more than a year, and shipments unexpectedly increased, suggesting corporate investment is regaining momentum despite tariffs and global weakness.
A proxy for business investment — nonmilitary capital-goods orders excluding aircraft — jumped 1.9% in June after a downwardly revised 0.3% increase in the prior month, according to Commerce Department figures July 25 that topped estimates. A separate Labor Department report showed filings for unemployment benefits fell last week to a three-month low, indicating the job market remains tight.
The largest increase in equipment orders since February 2018 was broad-based and could ease concerns that the trade war with China and weakening global growth risk a deeper slowdown in the U.S. economy. Such strength, along with recent data showing firm consumer spending and job gains, may dissuade the Federal Reserve from continuing to cut interest rates after a widely anticipated quarter-point reduction next week.
Shipments of business equipment also rose from the prior month, compared with projections for a drop, indicating that second-quarter gross domestic product due July 26 may be better than previously expected. Analysts had projected an annualized GDP growth rate of 1.8%, down from 3.1% in the first three months of the year, on slowing business investment and a drag from inventories.
U.S. trade negotiators are set to travel to China next week and meet for the first time since talks broke down in May, signaling some progress in reaching a deal between the world’s largest economies.
