Orders for US business equipment rise as shipments accelerate

New orders for US-made core capital goods rose in September, while shipments accelerated. Core capital goods are business equipment excluding defense goods and aircraft, a measure commonly used to track companies’ willingness to invest in equipment.^[1]

The broader durable-goods category—products intended to last at least three years—recorded a $6.3 billion increase in orders to $345.4 billion, following a 0.1% rise in August. That category covers more than business equipment.^[2]

More orders give equipment manufacturers additional business to produce and deliver; faster shipments show more business reaching the delivery stage, supporting conversion into sales revenue. The report therefore suggests that business equipment spending maintained a robust growth pace in the third quarter.^[1]

This strengthens the evidence that equipment investment supported economic growth. Order and shipment values can also change with prices, however, so they do not directly measure growth in the quantity of equipment purchased.^[1]

Impact

• Business equipment manufacturers and component suppliersOpportunity

  Higher core equipment orders give manufacturers demand to plan production around. If those orders continue turning into deliveries, they can also support purchases from component suppliers. The aggregate figures do not establish equal gains for every company or equipment category.^[1]

What to watch next

• The October 29 US third-quarter GDP report will test how much equipment investment contributed to economic growth.
• The October ISM manufacturing purchasing managers’ index, due November 2, will show whether manufacturing demand and production carried into the fourth quarter.