US business spending digging out of deep hole; outlook uncertain | Malay Mail

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WASHINGTON, Sept 25 — New orders for key US-made capital goods increased more than expected in August and shipments raced to their highest level in nearly six years, suggesting a rebound in business spending on equipment was underway after a prolonged slump. The show of confidence by businesses...

A view of the Manhattan skyline as seen from Calvary Cemetery during the outbreak of the coronavirus disease in the Queens borough of New York May 5, 2020. — Reuters pic

But fiscal aid is running out and new coronavirus cases are rising in the country, clouding the fourth-quarter picture. Orders for non-defence capital goods excluding aircraft, a closely watched proxy for business spending plans, rose 1.8 per cent last month to the highest level since July 2018. Data for July was revised up to show these so-called core capital goods orders increasing 2.5 per cent instead of 1.9 per cent as previously reported. Core capital goods orders are now above their pre-pandemic level.

Business investment tumbled at a record 26 per cent annualized rate in the second quarter, with spending on equipment collapsing at an all-time pace of 35.9 per cent. Investment in equipment has contracted for five straight quarters. But the economy is far from being out of the woods. Government loan programs to help businesses and income supplements for the tens of millions of unemployed have either lapsed or are close to expiring.

 

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