US factory orders surge, stoke hope of rebound in US business borrowing for equipment



by SOURAV D

US factory orders surge, stoke hope of rebound in US business borrowing for equipment
US factory orders surge, stoke hope of rebound in US business borrowing for equipment

On Friday, US Commerce Department data had unveiled that new orders for US-borne factory goods surged more than anticipated in October, raising hopes of a potential bounce back in US business spending on equipment, a crucial indicator to future investments that contracted on third quarter following four straight quarters of double-digit gains.

If truth is to be spoken, although, latest Commerce Department data had underscored a brightening up of outlook in US factory activities that accounted for an 11.9 per cent of entire economic activities in the United States, demands of US-borne factory goods have still been propelled higher by a robust customer appetite even as a large chunk of consumer spending had shifted back to services.

Nonetheless, an ongoing shortage in raw materials alongside a supply chain constraint could add to further stain on a much-squeezed US labor market, which seemed to be closing in on a maximum employment according to Friday’s US nonfarm payrolls data.

However, orders for US-borne factory goods had soared 17.1 per cent compared to the same time a year earlier in October, as analysts had forecasted a sharp rebound in US business borrowing for equipment over fourth quarter of 2021 which in effect would eventually seal off a strong wind-down of the year.

Orders for US-borne factory goods surge

According to US Commerce Department data released on Friday, orders for US-borne factory goods surged 1.0 per cent in October, while September data was revised higher to a gain of 0.5 per cent compared to a 0.2 per cent estimated initially.

On top of that, US businesses’ factory goods’ inventories gained 0.8 per cent in October, vindicating prospects of a record holiday quarter sales this year. Orders for non-defense capital goods in November, in tandem, a critical gauge to future business spending plans, was revised 0.7 per cent higher from an initially estimate of 0.6 per cent.

Commerce Department

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