U.S. business-equipment orders tame amid investment downshift

U.S. BUSINESS INVESTMENT increased 0.1% in November. / BLOOMBERG FILE PHOTO/SERGIO FLORES
U.S. BUSINESS INVESTMENT increased 0.1% in November. / BLOOMBERG FILE PHOTO/SERGIO FLORES

WASHINGTON – Orders for United States capital equipment barely increased in November, consistent with a downshift in corporate investment throughout the year that’s weighed on economic growth.

Bookings for non-military capital goods excluding aircraft – a proxy for business investment – rose 0.1%, matching projections, after a 1.1% jump in October that followed consecutive monthly declines, according to Commerce Department figures issued Monday.

Orders for all durable goods, or items meant to last at least three years, unexpectedly dropped 2%, reflecting a slump in military aircraft and a drop in civilian planes.

Key insights

  • Combined with a decrease in core shipments, the figures highlight a lack of appetite for capital expenditures, with profit growth cooling and business sentiment still subdued amid global demand concerns. Despite a thawing in the U.S.- China trade war after this month’s phase-one agreement, a more sweeping deal that could spark greater investment and re- charge world growth prospects is a bigger challenge.
  • Other recent reports have showed manufacturing, while no longer suffering larger setbacks, remains weak. The Federal Reserve Bank of Philadelphia’s factory index dropped in December to a six-month low, while the New York Fed’s manufacturing gauge barely expanded.
  • The headline durable-goods figure was pressured by a decline in orders of commercial aircraft despite Boeing Co. reporting earlier this month that it received 63 orders in November compared with just 10 in October. Orders for motor vehicles and parts rebounded, likely reflecting the effects of the end of the auto workers’ strike at General Motors Co.

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  • Shipments of non-defense capital goods excluding aircraft – a measure used in gross domestic product calculations – fell 0.3% after a 0.7% increase. The report showed core business- equipment shipments fell 2.9% on a three-month annualized basis through November.
  • Excluding transportation equipment, which tends to be volatile, durable-goods orders were little changed after a 0.3% gain. Bookings for military hardware plunged 35.6%, the most since February 2017, while defense aircraft orders slid 72.7%.
  • Durable goods inventories expanded 0.4% for a second month.

Vince Golle is a reporter for Bloomberg News.

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