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Orders placed with U.S. manufacturers for business equipment strengthened in August, extending to six months a solid run of robust capital investment that’s helping fuel economic growth.
The value of core capital goods orders, which exclude aircraft and military hardware and is seen as a barometer of business equipment investment, increased 0.5% after an upwardly revised 0.3% a month earlier, Commerce Department figures showed Sept. 27.
Bookings for all durable goods — or items meant to last at least three years — rose 1.8% from the prior month, reflecting a pickup in orders for commercial aircraft.
The median estimate in a Bloomberg survey of economists called for a 0.4% increase in core capital goods orders and a 0.7% gain in total durables.
Business outlays for capital goods such as electronics, construction machinery and power generating equipment have been a key source of strength for the economy. Resilient consumer spending against a backdrop of lean inventories has also propelled demand for durables, even as capacity constraints frustrate factory production efforts.
Core capital goods shipments, a figure that will be used to calculate investment in the government’s third-quarter gross domestic product report, rose 0.7% after a 0.9% gain.
Bookings for commercial aircraft increased nearly 78%. Boeing Co. earlier reported 53 orders in August, up from 31 a month earlier. The government’s data aren’t always directly comparable on a month-to-month basis.
Outside of the volatile commercial aircraft category, bookings were mixed. While orders rose for communications equipment, electrical hardware and fabricated metals, they declined for motor vehicles, computers and machinery.
Unfilled orders for manufactured durable goods and inventories both rose, illustrating lingering bottlenecks and long lead times faced by manufacturers.
These supply chain disruptions help explain softness in recent manufacturing surveys. A recent survey of purchasing managers by IHS Markit showed an index of manufacturing slipped to a five-month low in September. A measure of order backlogs, however, climbed to the highest in data back to 2007.
— With assistance from Kristy Scheuble.
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