U.S. Core Capital Goods Orders Beat Expectations
Shipments rise modestly
New orders for key U.S.-manufactured capital goods unexpectedly rose in May, but the prior month's data was revised down, suggesting that businesses remained cautious about new capital investment because of higher borrowing costs and an uncertain economic outlook.
The report from the Commerce Department on Tuesday also showed shipments of these non-defense capital goods excluding aircraft, which are a closely watched proxy for business spending plans, increasing moderately last month. The marginal rise in these so-called core capital goods shipments pointed to continued weakness in business spending on equipment in the second quarter, though the pace of decline likely slowed.
"There are some notable downside risks around the outlook given the challenges companies are facing, not only from higher borrowing costs, but softer demand and potentially a further tightening in credit conditions," said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.
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