U.S. core capital goods orders and shipments rise solidly in June

U.S. core capital goods orders and shipments rise solidly in June
# 27 July 2021 20:16 (UTC +04:00)

New orders for key U.S.-made capital goods increased solidly in June despite supply constraints hampering production at some factories, suggesting business spending on equipment could remain strong beyond the second quarter, APA reports citing Investing.com.

Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, rose 0.5% last month, the Commerce Department said on Tuesday. These so-called core capital goods orders had gained 0.5% in May.

Economists polled by Reuters had on average forecast core capital goods orders advancing 0.7%.

U.S. stock index futures moved lower after the data. The dollar slipped against a basket of currencies. U.S. Treasury prices were higher.

Business investment on equipment has boomed during the COVID-19 pandemic, underpinning manufacturing, which accounts for 11.9% of the U.S. economy. Meanwhile consumer spending shifted to goods from services, with millions of Americans cooped up at home.

Record low interest rates and massive fiscal stimulus measures offered a further boost, causing supply constraints.

Though demand is reverting to services, with just under half of the population fully vaccinated against the coronavirus, spending on goods is likely to remain strong.

Households accumulated at least $2.5 trillion in excess savings during the pandemic and inventories are low, which will likely see businesses continuing to invest in equipment to boost output.

Core capital goods orders were lifted last month by machinery and primary metal products, as well as computers and electronic products. Orders for electrical equipment, appliances and components were unchanged.