US Capital-Equipment Orders Fall for Second Consecutive Month

George Frey/Bloomberg News

Orders placed with U.S. factories for business equipment declined in September for a second month, a sign momentum in capital investment has paused as global trade concerns persist, Commerce Department figures showed Oct. 25.

Non-military capital goods orders excluding aircraft fell 0.1% after dropping 0.2% the prior month; the figure is proxy for business investment. Shipments of those goods, used to calculate gross domestic product, were unchanged. The prior month was revised to unchanged from a 0.2% drop. The broader measure of bookings for all durable goods, or items meant to last at least three years, rose 0.8% following a 4.6% gain. That reflects a surge in orders for military aircraft and parts.

The report showed declines in bookings for electrical equipment, appliances and components, while orders for computers and electronic products were unchanged. Categories with gains included motor vehicles and parts, as well as machinery.

Uncertainty over trade is already cutting into companies’ expected profits and expansion plans, making it a risk to the pace of economic growth. Companies are coping with higher prices for steel and aluminum, and some firms cite tariffs as an investment and growth concern.

The data cover orders and shipments affected by tariffs placed on goods by the U.S. and China in July and August. In late September, the U.S. imposed a 10% levy on $200 billion in Chinese goods, rising to 25% Jan. 1, and President Trump has threatened fees on a further $267 billion of merchandise.

While business spending has been boosted this year by corporate tax cuts and buoyed by consumption, the latest figures suggest it might be cooling toward the end of the year. Even so, analysts project a 3.3% annualized pace of GDP growth in the third quarter, resulting in the best back-to-back periods since 2014; the figures are due Oct. 26.

Bookings for civilian aircraft and parts, typically a volatile category, fell 17.5% in September following a 63.7% gain in the prior month, according to the report. Meanwhile, orders for defense aircraft and parts more than doubled. Boeing Co. previously said that the planemaker received 65 orders in September, down from 99 in August.

A separate Labor Department report Oct. 25 showed filings for unemployment benefits ticked up last week on increases in Florida and Georgia following destruction by Hurricane Michael this month. Initial jobless claims rose 5,000 to 215,000, matching the median estimate in a Bloomberg survey of economists.

Excluding transportation-equipment demand, durable-goods orders rose 0.1% after a 0.3% gain. Orders for machinery rose 0.8%; bookings for motor vehicles and parts were up 1.3%.

Bookings for fabricated metal products dropped 0.7%; electrical equipment, appliances and components fell 0.5%.

Computers and related products orders fell 0.4%; communications gear was down 0.1%.

Defense capital-goods orders fell 14.3%, the biggest drop since March.

Durable-goods inventories rose 0.7%.