U.S. business spending slips, new home sales rise in August
By Jason Lange
WASHINGTON (Reuters) - U.S. business investment fell slightly in August, excluding spending on aircraft and defense equipment, but new home sales rose, suggesting that global economic headwinds were doing little to impede U.S. growth.
The U.S. economy is on track to grow 1.4 percent in the third quarter, the Atlanta Federal Reserve's GDPNow forecast model showed on Thursday.
The Commerce Department said capital goods orders excluding military wares and aircraft, a closely watched proxy for business spending plans, dropped 0.2 percent last month, a slightly bigger fall than analysts polled by Reuters had expected.
However, August's decline followed a gain in July that was the largest in over a year and which had boosted optimism that many American companies were unfazed by weak overseas markets.
The recent trend in orders gives a good signal for economic growth in the third quarter after business investment on equipment fell in the April-June period.
"Investment in equipment appears to be recovering," said Paul Ashworth, an economist for Capital Economics.
Durable goods orders overall fell 2.0 percent in August, in line with forecasts, but held back by a sharp decline in orders for civilian aircraft. Excluding transportation, orders were little changed.
Some business sectors are being hit by falling commodity prices though, with Caterpillar Inc (CAT.N: Quote) saying it might close or consolidate more than 20 plants around the world across its three large businesses - construction, resources, and energy and transportation. Continued...