WASHINGTON - New orders for key U.S.-made capital goods rose more than expected in May and shipments increased solidly, suggesting some stabilizing in business spending on equipment after a drop early in the year.
Growing risks to the economy, especially related to trade tensions between the United States and China, and low inflation, prompted the Federal Reserve to last week signal interest rate cuts starting as early as July. The economy will mark 10 years of growth next month, the longest expansion in history.
Shipments of core capital goods increased 0.7% last month after an upwardly revised 0.4% gain in the prior month. Core capital goods shipments are used to calculate equipment spending in the government’s gross domestic product measurement. The U.S. dollar held modest gains against a basket of currencies after the release of the data. U.S. stock index futures were trading higher while prices of U.S. Treasuries were lower.The weak business spending is weighing on production at factories. Manufacturing, which accounts for about 12% of the economy, is also being undermined by an inventory overhang, especially in the automobile industry, which has resulted in fewer orders being placed with factories.
Overall orders for durable goods, items ranging from toasters to aircraft that are meant to last three years or more, dropped 1.3% in May after declining 2.8% in the prior month. Overall durable goods shipments rose 0.4% and inventories increased 0.5% in May. Unfilled durable goods orders fell 0.5 percent, the most since June 2016, pointing to continued weakness in manufacturing in the months ahead. Regional manufacturing surveys have also weakened in June.
But the businesses are not coming back to the US they are moving to Vietnam & Korea
Today that special phone rang in the White House and realDonaldTrump began intense negotiations with Big Bird and Oscar the Grouch over the bigly-est trade deal ever. tradewar DementiaDon IdiotInChief idiotTrump