Cap­i­tal goods spend­ing re­bounds

Los Angeles Times - - Daily Market Roundup -

U.S. com­pa­nies in­vested in com­put­ers, com­mu­ni­ca­tions equip­ment and ma­chin­ery last month, boost­ing cap­i­tal goods or­ders for the third time in four months.

The 4.1% in­crease in cap­i­tal goods spend­ing in Au­gust sig­naled a re­bound af­ter or­ders fell 5.3% in July. It also sug­gests that man­u­fac­tur­ing, which has helped drive eco­nomic growth since the re­ces­sion ended in June 2009, is still a bright spot in a weak re­cov­ery.

The gains in cap­i­tal goods or­ders, along with a jump in busi­ness con­fi­dence in Ger­many, helped send stocks soar­ing Fri­day. The Dow Jones in­dus­trial av­er­age gained nearly 200 points.

The over­all de­mand for durable goods fell 1.3% in Au­gust, the Com­merce Depart­ment said. But that was pulled down by a sig­nif­i­cant drop in or­ders for air­craft. When ex­clud­ing the volatile trans­porta­tion sec­tor, or­ders rose 2% — the best show­ing in five months.

The man­u­fac­tur­ing sec­tor has ex­panded for 13 straight months, as mea­sured by the In­sti­tute for Sup­ply Man­age­ment.

Cap­i­tal goods or­ders, which ex­clude trans­porta­tion and de­fense goods, are seen as a good in­di­ca­tor of busi­ness spend­ing, and econ­o­mists watch them closely.

Busi­ness spend­ing on equip­ment and soft­ware has been grow­ing at a 20% an­nual rate over the last three quar­ters.

Econ­o­mists had wor­ried that July’s de­cline in cap­i­tal goods spend­ing was a sign the sec­tor was slow­ing.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.