Demand for U.S. Capital Goods Climbs Less Than Forecast

Bloomberg (26/9) - Orders for goods such as computers and machinery rose less than forecast in August, showing a pickup in U.S. business spending will take time to develop. Bookings for non-military capital equipment excluding aircraft increased 1.5 percent after a 3.3 percent drop in July, the Commerce Department reported today in Washington. The median forecast of economists surveyed by Bloomberg projected a 2 percent gain. Another report showed sales of new houses over the past two months were the weakest of the year. Factory production is stabilizing as Americans replace older-model cars and companies invest in new technology. An escalating budget battle in Washington and higher interest rates mean companies will need to see bigger gains in sales to justify updating equipment, which will probably limit any rebound in manufacturing. Orders are “rising, but they’re rising modestly,” said Kevin Logan, chief U.S. economist for HSBC Securities USA Inc. in New York, the second-best forecaster for capital goods orders over the past two years, according to data compiled by Bloomberg. “Until businesses are more confident about the growth in underlying demand, they’ll be cautious as far as adding capacity.” http://www.bloomberg.com/news/2013-09-25/demand-for-u-s-capital-goods-climbs-as-investment-recovers.html