US business equipment spending stays strong even as new orders flatten

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US business equipment spending stays strong even as new orders flatten

On Wednesday, US Commerce Department said in a statement that new orders for US-borne core capital goods remained unexpectedly flatlined last month in context of a clattering supply constraint alongside a turpentine shift in demands towards services from goods, raising frets that US business borrowing on equipment could ease over second half of 2021 following a robust build-up over recent past.

Nevertheless, as US Commerce Department report had unveiled that US core capital goods’ shipments rose 1.0 per cent last month with orders still winged about 18 per cent higher of their pre-pandemic readouts, business spending in equipment appeared to be turning north despite growing odds at this standpoint, suggested analysts.

However, US business spending on equipment, a critical gauge to future investment plans, has been expected to offset the impacts of an ostensive hibernation in consumer spending while hauling the economy further throughout this quarter.

Meanwhile, referring to a solid equipment spending landscape in the United States last month, a lead US economist at Oxford Economics in New York, Oren Klachkin said, “Overall, the July data point to solid equipment spending growth at the start of third quarter.

But with producer prices running high and the recovery tilting in favor of high-contact services, we're likely to see a gradual moderation in real equipment spending growth in the second half of 2021”.

New orders for US-made core capital goods flatlined in July

According to US Commerce Department data, new orders for US-borne core capital goods excluding defense items remained unexpectedly flatlined last month, missing an analysts’ estimate of a rise of 0.5 per cent, that followed a 1.0 per cent increase in June which was revised higher from an initial reading of 0.7 per cent, though durable goods’ orders had declined 0.1 per cent in July.

Apart from that, US core capital goods shipments soared 1.0 per cent with orders anchoring about an 18 per cent above a pre-pandemic level as beforementioned.