In the latest indication of an acceleration in economic growth early in the fourth quarter, driven by rising demand for machinery and a range of other equipment, new orders for U.S. manufactured capital goods rebounded in October.
This month, following the election of Donald Trump as the next president, the brightening economic outlook received a further boost from other data on Wednesday showing a jump in consumer sentiment.
The trend in jobless claims remained consistent with a tightening labor market while the number of Americans filing for unemployment benefits rose from a 43-year low last week.
The minutes of the Fed’s November policy meeting showed rate setters appeared confident that a rise would come "relatively soon" and the data reinforced expectations the Federal Reserve would hike interest rates at its December meeting.
"Everything seems to be moving in the right direction in the economy. The weak links are recovering and the strengths are staying strong. The Fed is not going to continue doing nothing," said Joel Naroff, chief economist at Naroff Economic Advisers in Holland, Pennsylvania.
After declining 1.4 percent in September, there was a rise of 0.4 percent in the non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, the Commerce Department said. In four of the last five months, these so-called core capital goods orders have now increased.
After a 0.4 percent gain in September, shipments of core capital goods rose 0.2 percent last month. Calculation of equipment spending in the government's gross domestic product measurement makes use of core capital goods shipments.
With items ranging from toasters to aircraft that are meant to last three years or more, which jumped 4.8 percent last month, there was a 12 percent surge in demand for transportation equipment buoyed overall orders for durable goods. That was the biggest rise in a year and followed a 0.4 percent increase in September.
Business spending remained weak as companies struggled with the impact of a strong dollar and lower oil prices on profits even as the economy has regained momentum after stumbling in late 2015 and early 2016. Weighing heavily on manufacturing, which accounts for 12 percent of the U.S. economy, business spending on equipment has declined for four straight quarters.
There is cautious optimism that business investment on equipment will rebound in the fourth quarter with core capital goods orders steadily increasing in tandem with rising gas and oil well drilling activity.
But amid renewed strength in the dollar, gains are likely to be modest. The greenback's rally had appeared to run out of steam for much of the year. Still v were mirrored by the rise in both core capital goods orders and shipments.
"Activity in the manufacturing sector is getting a little better, but is still far from robust. The recent strengthening in the dollar does pose a renewed risk to growth in the industrial sector," said Michael Feroli, an economist at JPMorgan in New York.
Its consumer sentiment index rose 8.2 points from the pre-election reading to 93.8, the University of Michigan said I a separate report. That put the index 6.6 points above the October reading. With gains recorded among all income and age subgroups and across all regions of the country, the post-election surge in optimism was widespread, UMich said.
(Source:www.reuters.com)
This month, following the election of Donald Trump as the next president, the brightening economic outlook received a further boost from other data on Wednesday showing a jump in consumer sentiment.
The trend in jobless claims remained consistent with a tightening labor market while the number of Americans filing for unemployment benefits rose from a 43-year low last week.
The minutes of the Fed’s November policy meeting showed rate setters appeared confident that a rise would come "relatively soon" and the data reinforced expectations the Federal Reserve would hike interest rates at its December meeting.
"Everything seems to be moving in the right direction in the economy. The weak links are recovering and the strengths are staying strong. The Fed is not going to continue doing nothing," said Joel Naroff, chief economist at Naroff Economic Advisers in Holland, Pennsylvania.
After declining 1.4 percent in September, there was a rise of 0.4 percent in the non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, the Commerce Department said. In four of the last five months, these so-called core capital goods orders have now increased.
After a 0.4 percent gain in September, shipments of core capital goods rose 0.2 percent last month. Calculation of equipment spending in the government's gross domestic product measurement makes use of core capital goods shipments.
With items ranging from toasters to aircraft that are meant to last three years or more, which jumped 4.8 percent last month, there was a 12 percent surge in demand for transportation equipment buoyed overall orders for durable goods. That was the biggest rise in a year and followed a 0.4 percent increase in September.
Business spending remained weak as companies struggled with the impact of a strong dollar and lower oil prices on profits even as the economy has regained momentum after stumbling in late 2015 and early 2016. Weighing heavily on manufacturing, which accounts for 12 percent of the U.S. economy, business spending on equipment has declined for four straight quarters.
There is cautious optimism that business investment on equipment will rebound in the fourth quarter with core capital goods orders steadily increasing in tandem with rising gas and oil well drilling activity.
But amid renewed strength in the dollar, gains are likely to be modest. The greenback's rally had appeared to run out of steam for much of the year. Still v were mirrored by the rise in both core capital goods orders and shipments.
"Activity in the manufacturing sector is getting a little better, but is still far from robust. The recent strengthening in the dollar does pose a renewed risk to growth in the industrial sector," said Michael Feroli, an economist at JPMorgan in New York.
Its consumer sentiment index rose 8.2 points from the pre-election reading to 93.8, the University of Michigan said I a separate report. That put the index 6.6 points above the October reading. With gains recorded among all income and age subgroups and across all regions of the country, the post-election surge in optimism was widespread, UMich said.
(Source:www.reuters.com)
