MBA (8/28/2008 ) Velz, Orawin
Yesterday’s report showed that business investment held up well going into the third quarter. New orders for manufactured durable goods rose by 1.3 percent in July, helped by strong demand for aircraft.
Excluding the volatile orders for transportation equipment, orders were up by 0.7 percent, following a 2.6 percent increase in June. Shipments for nondefense capital goods excluding aircraft—a component used in the calculation of economic growth in the current quarter—rose by 0.6 percent after a 0.4 percent gain in the prior month.
The report also indicated stronger future business investment spending. Nondefense capital goods orders excluding aircraft—a proxy for business investment in equipment and software in the coming quarters—rose by 2.6 percent, the biggest increase since April.
The strong increase is encouraging for the fourth quarter economic growth, when the impact of the fiscal stimulus is expected to fade.
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