Key facts
- Core capital goods orders rose 1.6% in August, exceeding economists' forecasts.
- July's core capital goods orders were revised higher to a 0.6% increase.
- Shipments of core capital goods rose 0.6% in August.
- Business spending on equipment has seen two quarters of double-digit growth, driven by AI investments.
New orders for key U.S.-manufactured capital goods saw a significant increase in August, surpassing expectations and indicating continued robust growth in business investment in equipment. This surge is largely attributed to ongoing investments in artificial intelligence infrastructure.
The Commerce Department's Census Bureau reported that non-defense capital goods orders, excluding aircraft, rose by 1.6% in August. This figure exceeded the 0.5% forecast by economists polled by Reuters. Furthermore, the data for July was revised upward, showing a 0.6% increase instead of the previously reported unchanged reading.
Shipments of these core capital goods, a component used in calculating business spending on equipment for the gross domestic product (GDP) report, also showed positive movement, increasing by 0.6% in August after a 1.4% advance in July. Business spending on equipment has experienced two consecutive quarters of double-digit growth, bolstered by substantial investments in AI, which has helped support manufacturing and the broader economy. However, economists caution that manufacturing segments not directly tied to AI could face slowdowns due to rising oil prices, interest rates, and long-term Treasury yields.