Rise in Capital Goods Orders

Capital Goods Orders in U.S. Climb, Signaling Investment Pickup

By Timothy R. Homan - Jul 28, 2010 8:57 PM GMT+0800
url: http://www.bloomberg.com/news/2010-07-28/capital-goods-orders-in-u-s-climb-signaling-investment-pickup.html

Orders and shipments for non-military capital goods excluding aircraft climbed in June, signaling investment by U.S. businesses picked up heading into the second half of the year.

Such bookings increased 0.6 percent after jumping 4.6 percent in May, more than previously reported, figures from the Commerce Department showed today in Washington. Total orders for durable goods, those meant to last at least three years, unexpectedly dropped 1 percent, depressed by a decrease in demand for aircraft which is often volatile.

Eaton Corp. is among manufacturers benefiting from a pickup in demand as companies in the U.S. and abroad update equipment that is helping to support the recovery. The gains will partially compensate for a slowdown in consumer spending that is causing the world’s largest economy to cool heading into the second half of the year.

“Businesses are, in general, still investing,” said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit, who projected a decline in durable goods orders excluding transportation. “If they want to compete, they have to invest. The recovery is continuing.”

Stock-index futures dropped after the report showed weakness in overall orders. The contract on the Standard & Poor’s 500 Index fell 0.2 percent to 1,108.6 at 8:56 a.m. Treasury securities rose, pushing the yield on the benchmark 10-year note down to 3.04 percent from 3.05 percent late yesterday.