Orders for Business Equipment Rise More Than Predicted
Bookings for non-military capital goods excluding aircraft rose 1.3%, the most in three months, after an upwardly revised 0.4% increase in September, data from the Commerce Department showed Nov. 25. Orders for all durable goods — items meant to last at least three years — climbed 3%, almost twice the median estimate in a Bloomberg survey.
Persistent strength in the United States., thanks in part to a consumer who has benefited from a better job market, may be encouraging companies to spend more on new equipment after years of underinvestment. A pickup in foreign markets would help fatten the order books of American producers, allaying concerns that global growth is faltering.
“The orders suggest there is some momentum as we head into the end of the fourth quarter,” said Jacob Oubina, senior U.S. economist at RBC Capital Markets in New York, whose forecast for business equipment demand was the closest in the Bloomberg survey. “We’ve seen a carving out of the weakness that’s plagued the manufacturing space in recent months.”
The median forecast of 76 economists surveyed by Bloomberg estimated durable goods orders would rise 1.7%, with projections ranging from a 0.7% drop to a 4% increase.
Orders for non-defense capital goods excluding aircraft — a proxy for business investment — were projected to rise 0.2% after a previously reported 0.1% drop in September. Demand for primary metals, machines, electronics and communications equipment picked up last month.
Shipments of non-military capital goods excluding aircraft, used to calculate gross domestic product, decreased 0.4% in October after rising 0.7% the month before. September was revised from a previously reported 0.5% gain.
Commercial aircraft orders surged 81% in October after dropping 32.2% a month earlier. Boeing Co., the Chicago-based aerospace company, said it received 59 orders for planes last month, the most since July.
Excluding transportation equipment demand, which is volatile from month to month, bookings increased 0.5% in October, the report showed. Demand for non-defense goods jumped 3.2% after falling 1.6%.
The tighter labor market has led to emerging wage pressures that may make capital investment seem more attractive. Average hourly earnings climbed by 2.5% in October, the most since July 2009, according to Labor Department data.
