WASHINGTON (Reuters) – New orders for key U.S.-manufactured capital goods rebounded more than expected in April and shipments of these goods also increased, suggesting a pick up in business spending on equipment early in the second quarter.
Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, rose 0.3% last month after an upwardly revised 0.1% dip in March, the Commerce Department’s Census Bureau said on Friday.
Economists polled by Reuters had forecast these so-called capital goods orders edging up 0.1% after declining by a previously reported 0.2% in March. Core capital goods shipments increased 0.4% after dropping 0.3% in March.
Business spending on equipment rebounded marginally in the first quarter after two straight quarterly declines, making a small contribution to the economy’s 1.6% annualized growth pace.
Investment has been hampered by 525 basis points worth of interest rate hikes from the Federal Reserve since March 2022, which have eroded demand for goods and raised financing costs for businesses. Economists expect the U.S. central bank to start its easing cycle in September. The Fed has kept its policy rate in the 5.25%-5.50% range since July.
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)
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