WASHINGTON: New orders for US manufactured capital goods rebounded in October, driven by rising demand for machinery and a range of other equipment, the latest indication of an acceleration in economic growth early in the fourth quarter.
The brightening economic outlook received a further boost from other data on Wednesday showing a jump in consumer sentiment this month following the election of Donald Trump as the next president. Consumers embraced the business mogul’s victory, which they viewed as positive for their personal finances and the economy’s prospects.
While the number of Americans filing for unemployment benefits rose from a 43-year low last week, the trend in jobless claims remained consistent with a tightening labour market. Overall, the tone of the reports supported views that the Federal Reserve will raise interest rates next month.
The Commerce Department said non-defence capital goods orders excluding aircraft, a closely watched proxy for business spending plans, rose 0.4 per cent after declining 1.4 per cent in September. These so-called core capital goods orders have now increased in four of the last five months.
Shipments of core capital goods rose 0.2 per cent last month after a 0.4 per cent gain in September. Core capital goods shipments are used to calculate equipment spending in the government’s gross domestic product measurement.
A 12 per cent surge in demand for transportation equipment buoyed overall orders for durable goods, items ranging from toasters to aircraft that are meant to last three years or more, which jumped 4.8 per cent last month. That was the biggest rise in a year and followed a 0.4 per cent increase in September.
In a separate report, the University of Michigan said its consumer sentiment index rose 8.2 points from the pre-election reading to 93.8. That put the index 6.6 points above the October reading.
UMich said the post-election surge in optimism was widespread, with gains recorded among all income and age subgroups and across all regions of the country.