Business Excellence Awards
Applications are now being accepted for the 14th Annual Business Excellence Awar ...
By Lorraine Woellert
By Lorraine Woellert
WASHINGTON - Orders for U.S. equipment such as computers and machinery climbed less than forecast in August, indicating a strengthening in business spending will take time to develop.
Bookings for non-military capital goods excluding aircraft increased 1.5 percent after a 3.3 percent drop in July, the Commerce Department reported today in Washington. The median forecast of economists surveyed by Bloomberg projected a 2 percent gain. Demand for all durable goods, those meant to last at least three years, rose 0.1 percent after plunging 8.1 percent in July.
Improving demand for autos and homes is helping factories stabilize after struggling overseas markets and federal government spending cuts that began in March slowed progress. Continued budget wrangling in Washington and higher interest rates will probably also take a toll, restraining any rebound in manufacturing, which accounts for about 12 percent of the economy.
“It’s fairly tepid,” said Gennadiy Goldberg, an economist at TD Securities USA LLC in New York. “A lot of companies are very cautious. Nobody wants to build up particularly large inventories or put in orders for equipment when they think there’s a lot of uncertainty on the table.”
Stock-index futures were little changed, after the Standard & Poor’s 500 Index dropped four straight days, as concern grew that lawmakers won’t reach a budget deal. The contract on the S&P 500 maturing in December rose less than 0.1 percent to 1,692.8 at 9:12 a.m. in New York.
Excluding transportation equipment, where demand is often volatile month to month, orders declined 0.1 percent after a 0.5 percent drop in July.
Forecasts for total durable goods orders in the Bloomberg survey of economists ranged from a drop of 4.5 percent to a 5.5 percent advance. The decline in July was revised from a previously reported 7.4 percent drop.
Demand for non-defense capital goods excluding aircraft is considered a proxy for future business investment in computers, electronics and other equipment. Last month’s increase was the biggest since May.
Shipments of those products, a measure used to calculate gross domestic product, advanced 1.3 percent in August after declining 1.4 percent the prior month. Sales were down 3.3 percent over the past three months at an annualized rate, compared with a 0.9 percent decline at the end of the second quarter, indicating business investment will take time to rebound.
One bright spot for manufacturers is growth in demand for motor vehicles. Cars and light trucks sold at a 16 million annualized rate last month, the fastest since November 2007, after 15.7 million in July, figures from Ward’s Automotive Group showed. Sales at General Motors Co., Ford Motor Co., Toyota Motor Corp. and Honda Motor Co. exceeded analysts’ estimates last month.
The real estate recovery, which has boosted household wealth and fueled orders for furniture and appliances, is showing signs of cooling amid higher borrowing costs. While the S&P/Case-Shiller index of property values in 20 cities increased 12.4 percent from July 2012, price appreciation slowed on a month-to-month basis.
United Technologies Corp., a global supplier of technology and industrial equipment to aerospace and building companies, sees signs of improvement in commercial construction, Chief Financial Officer Gregory Hayes said.
“We have seen very solid order growth in the first half of the year, which gives us high confidence of the back half of the year,” Hayes said at a Sept. 17 conference. “Commercial property prices especially are recovering. Vacancy rates are slowly coming down. So I think people generally feel good about the commercial construction opportunities here in the U.S.” UTC is based in Hartford, Connecticut.