Business Spending Plans Slumped Sharply as Debt Fight Heated up

Monday, 04 Nov 2013 10:08 AM

 

  Comment  |
   Contact  |
  Print   |
    A   A  
  Copy Shortlink
Orders for a wide range of U.S.-made capital goods sank more than previously estimated in September, a sign companies cut their investment plans sharply as Washington hurtled to the brink of default.

New orders of non-military capital goods other than aircraft, an indicator of business spending plans, fell 1.3 percent during the month, the Commerce Department said on Monday.

The data suggests businesses may have shut their wallets as a political impasse threatened to lead the government to miss payments on its obligations, and could give the Federal Reserve more reason to leave its bond-buying stimulus program at full throttle for the rest of 2013.

Previously, the government had estimated that the gauge of business spending plans dropped 1.1 percent in September.

"It implies pretty lackluster growth," said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida. "This could be further justification for the Fed to stay the course."

At the same time, other data have suggested factory activity accelerated in October despite the political standoff between President Barack Obama and congressional Republicans.

On Friday, the Institute for Supply Management said U.S. manufacturing sector expanded at its fastest pace in more than two years in October.

Monday's data showed a surge in volatile aircraft orders helped push overall orders of factory goods to rise 1.7 percent, in line with the expectations of economists polled by Reuters.

The data appeared to have little impact on sentiment on Wall Street. U.S. stocks edged higher, as did prices for U.S. government debt, with investors looking ahead to more significant data releases later in the week.

The government impasse was eventually resolved in October, though not before a partial government shutdown left hundreds of thousands of people out of work for weeks and also delayed the release of a slew of economic data, including Monday's data on factory orders.

The report showed overall new orders for factory goods slipped 0.1 percent in August.

Shipments for the core capital goods category, which strips out aircraft and military wares and also directly feeds into the Commerce Department's calculations of economic growth, fell 0.2 percent in September.

© 2014 Thomson/Reuters. All rights reserved.

  Comment  |
   Contact  |
  Print   |
  Copy Shortlink
Around the Web

Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 

You May Also Like
Around the Web

Most Commented

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved