U.S. posts sharp increase in U.S.-made capital goods, shipments

In September, new orders for U.S.-made capital goods reached a new high, while shipments also increased. The development reflected solid business expenditure on equipment. However, tight supply chains were seen to have disrupted overall economic expansion in the third quarter.

Non-defense capital goods orders, excluding aircraft, climbed 0.8% to an all-time high last month. This was higher than August’s reading and economists’ expectations of a 0.5% growth.

Orders for machinery, primary metals, and manufactured metals items all increased. However, orders for electrical equipment, appliances, and components, as well as computers and electronic devices, decreased, owing to a global chip shortage.

Statistics released by the Commerce Department on Wednesday confirmed slower growth projections. The slowdown was driven by a huge gap in goods trade deficit last month as exports tumbled. Wholesale inventories climbed, while retail inventories decreased following a global semiconductor shortage’s impact on vehicle dealership supply.

Christopher Rupkey, chief economist at FWDBONDS in New York, said that the third quarter would likely record the weakest quarterly economic growth in more than a year. However, he said business capital spending may support economic expansion.