New orders for major capital goods produced in the US rose more than expected in April and shipments of these goods also increased. This indirectly indicates an increase in business spending on equipment at the beginning of the second quarter.
Orders for non-defense capital goods excluding aircraft, which is a closely watched proxy for business spending plans, rose 0.3% last month after an upwardly revised 0.1% decline in March, the Commerce Department's Census Bureau said on Friday.
Economists polled by Reuters had forecast capital goods orders to rise 0.1% after a previously reported 0.2% decline in March. Shipments of core capital goods rose 0.4% after falling 0.3% in March.
Business spending on equipment recovered slightly in the first quarter after two consecutive quarterly declines, contributing little to the economy's annual growth rate of 1.6%.
Investment has been hampered by a 525 basis point increase in interest rates from the Federal Reserve since March 2022, which has eroded demand for goods and increased funding costs for businesses. Economists expect the US central bank to begin a cycle of interest rate cuts in September. The Fed has kept policy rates in the 5.25%-5.50% range since July.
