Demand for U.S.-made capital goods recorded its biggest drop
in eight months in September, a cautionary note for an economy that otherwise
seems to be moving forward at a steady clip. A moderation in home price gains
in August, offered a further suggestion the economy may have cooled a bit,
although consumer confidence jumped to a seven-year high this month. Non-defense
capital goods orders excluding aircraft, a closely watched proxy for business
spending plans, fell 1.7 percent last month, the Commerce Department said. It
was the largest drop in so-called core capital goods demand since January, and
it surprised economists who had expected a 0.6 percent gain.
Some analysts blamed the weakness on slowing growth in China
and the euro zone, but they said there was no reason for alarm, noting that an
array of other manufacturing indicators have remained relatively strong.
A second report showed the S&P/Case-Shiller composite
index of home prices in 20 metropolitan areas gained 5.6 percent in August from
a year earlier. It was the slowest year-on-year increase since November 2012,
and just the latest sign the housing sector continues to muddle along.
The strong confidence reading and healthy corporate earnings
boosted U.S. stocks. Prices for U.S. Treasury debt were trading lower, while
the dollar fell against a basket of currencies.
The mixed data was unlikely to have much of an impact on
U.S. monetary policy, with Federal Reserve officials expected to show little
sign of being in a hurry to start raising interest rates when they end a
two-day policy meeting on Wednesday.
With core capital good orders declining, overall orders for
durable goods - items ranging from toasters to aircraft that are meant to last
three years or more - fell for a second straight month.
Orders have been volatile recently because of big swings in
aircraft demand. Aircraft orders dropped 16.1 percent in September, which came
as a surprise as Boeing had recently reported 122 new orders, up from 107 in
August.
Core capital goods shipments, which are used to calculate
equipment spending in the government's gross domestic product measurement,
slipped 0.2 percent in September.
While the weakness in shipments suggested a slightly less
robust pace of business spending in the third quarter, economists said they
still thought business investment would provide a sizable contribution to third
quarter economic growth.
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