US capital goods orders rise in August

U.S. New orders for manufactured capital goods rose unexpectedly in August, although business spending on equipment appeared to have lost momentum in the third quarter.

Orders for non-defense capital goods excluding aircraft, a closely watched indicator of companies’ spending plans, rose 0.2% last month, following a 0.2% drop in July, the Commerce Department said on Thursday.

Economists polled by Reuters had forecast orders to be unchanged in July after earlier reporting a 0.1% drop in July.

Capital goods orders rose 0.3% year-on-year in August.

Although high borrowing costs were a drag on business investment and financial conditions eased, the Federal Reserve began a cycle of interest rate cuts and boosted equipment spending in the second quarter.

Last week, the US Federal Reserve cut its interest rate by 50 basis points to a range of 4.75% to 5.00%, the first cut in borrowing costs since 2020. The Fed raised interest rates by 525 basis points in 2022 and 2023.

Orders for durable goods, items ranging from toasters to airplanes that last three years or more, were unchanged last month after rising 9.9% in July.