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After reporting sharp increases in new orders for U.S. manufactured durable goods over the past few months, the Commerce Department released a report on Friday showing durable goods orders climbed much less than expected in the month of August.
The Commerce Department said durable goods orders rose by 0.4 percent in August after soaring by an upwardly revised 11.7 percent in July.
Economists had expected durable goods orders to surge up by 1.5 percent compared to the 11.4 percent spike that had been reported for the previous month.
Excluding a 0.5 percent increase in orders for transportation equipment, durable goods orders still climbed by 0.4 percent in August following a 3.2 jump in July. Ex-transportation orders were expected to shoot up by 1.5 percent.
The uptick in durable goods orders partly reflected notable increases in orders for machinery, primary metals and computers and electronic products.
The growth was partly offset by significant declines in orders for fabricated metal products and electrical equipment, appliances and components.
Meanwhile, the report said orders for non-defense capital goods excluding aircraft, a reading on business spending, advanced by 1.8 percent in August after jumping by an upwardly revised 2.5 percent in July.
Shipments in the same category, which is the source data for equipment investment in GDP, increased by 1.5 percent in August after surging up by 2.8 percent in July.
Andrew Hunter, Senior U.S. Economist at Capital Economics, said shipments remain on course to rebound by more than 30 percent annualized over the third quarter as a whole.
"That suggests that, after falling by 35.9% annualized in the second quarter, business equipment investment will also rebound by more than 30% in the third," Hunter said.
He added, "Although other sectors of the economy are clearly still struggling, this confirms that the overall hit to equipment investment from the pandemic has been far smaller than during the financial crisis."
