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US business spending plan gauge rises
Source: Agencies |
November 28, 2012, Wednesday
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Print Edition
A GAUGE of planned United States business spending increased by the most in five months in October, but a fourth straight month of declines in shipments underscored the damage that fears of tighter fiscal policy next year are inflicting on the economy.
The US Commerce Department said yesterday that non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, rebounded 1.7 percent last month after falling 0.4 percent the prior month.
Economists had expected a 0.5 percent decline.
Shipments of the so-called core capital goods orders, used to calculate equipment and software spending in the gross domestic product report, fell 0.4 percent. It was the fourth straight decline in shipments.
"Capital spending will remain a drag on the economy in the fourth quarter," said Andrew Grantham, an economist at CIBC World Markets in Toronto.
Businesses are cutting back on capital spending, wary of automatic government spending cuts and tax increases, known as the fiscal cliff, that are set to kick in early next year unless the US Congress and the Obama administration can agree on a plan to cut the budget deficits.
The fiscal cliff could drain about US$600 billion from an already fragile economy. Business spending is also being undermined by the long-running debt problems in Europe and slowing global demand, especially in China.
The US Commerce Department said yesterday that non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, rebounded 1.7 percent last month after falling 0.4 percent the prior month.
Economists had expected a 0.5 percent decline.
Shipments of the so-called core capital goods orders, used to calculate equipment and software spending in the gross domestic product report, fell 0.4 percent. It was the fourth straight decline in shipments.
"Capital spending will remain a drag on the economy in the fourth quarter," said Andrew Grantham, an economist at CIBC World Markets in Toronto.
Businesses are cutting back on capital spending, wary of automatic government spending cuts and tax increases, known as the fiscal cliff, that are set to kick in early next year unless the US Congress and the Obama administration can agree on a plan to cut the budget deficits.
The fiscal cliff could drain about US$600 billion from an already fragile economy. Business spending is also being undermined by the long-running debt problems in Europe and slowing global demand, especially in China.
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