WASHINGTON (Reuters) - New orders for U.S.-made capital goods increased solidly in October, suggesting a rebound in business spending on equipment early in the fourth quarter.
Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, rose 0.6% last month, the Commerce Department said on Wednesday. These so-called core capital goods orders gained 1.3% in September.
Economists polled by Reuters had forecast core capital goods orders climbing 0.5%. Part of the increase last month likely reflected higher prices amid global shortages of goods.
Shipments of core capital goods increased 0.3% last month after advancing 1.3% in September. Core capital goods shipments are used to calculate equipment spending in the GDP measurement.
Business spending on equipment contracted in the third quarter after four straight quarters of double-digit growth. It was weighed down a shortage of motor vehicles. A global shortage of semiconductors is undercutting motor vehicle production.
Unfinished work continues to pile up at factories as manufacturers struggle with snarled supply chains. This, together with strong demand for goods even as spending reverts back to services, should keep manufacturing, which accounts for 12% of the economy, humming.
Orders for durable goods, items ranging from toasters to aircraft that are meant to last three years or more, fell 0.5% last month after declining 0.4% in September.
They were depressed by a 2.6% drop in orders for transportation equipment, which followed a 2.8% decline in September. Motor vehicle orders rebounded 4.8% after falling 2.2% in September
Orders for the volatile civilian aircraft category tumbled 14.5% after plunging 31.2% in September. Boeing (NYSE:BA) reported on its website that it had received only 10 aircraft orders last month compared to 27 in September.