Orders for U.S. capital goods stagnate spending slumps

Jobless Claims

Jobless claims decreased by 23,000 to 369,000 in the week ended Oct. 20 from a revised 392,000 the prior period, the Labor Department reported today. The median forecast of 48 economists surveyed by Bloomberg called for a drop in claims to 370,000.

Stock-index futures held earlier gains after the reports. The contract on the Standard & Poor’s 500 Index maturing in December climbed 0.5 percent to 1,412.7 at 8:47 a.m. in New York. Treasury securities fell, sending the yield on the benchmark 10-year note up to 1.84 percent from 1.79 percent late yesterday.

Orders for non-defense capital goods excluding aircraft dropped at a 23.5 percent annual rate in the third quarter after falling at a 5.9 percent pace in the three months ended June, today’s Commerce Department report showed.

Shipments of those capital goods, used in calculating gross domestic product, decreased 0.3 percent in September from the prior month after dropping 1.2 percent in August. For the quarter, sales decreased at a 4.9 percent annual rate compared with a 5.1 percent gain from April through June, a sign businesses cut spending over the past three months.

GDP Forecast

The economy grew at a 1.9 percent annual rate in the third quarter after expanding at a 1.3 percent pace the prior three months, according to the median forecast of economists surveyed by Bloomberg ahead of Commerce Department data tomorrow. It would be the first back-to-back readings lower than 2 percent since the U.S. was emerging from the recession in 2009.

Federal Reserve policy makers yesterday said the economy is still growing modestly and unemployment remains elevated as it maintained $40 billion in monthly purchases of mortgage-backed securities aimed at spurring the three-year expansion.

The slowdown in business investment was among the things the central bank highlighted in discussing the current state of the economy.

Today’s report showed orders for computers dropped 2.5 percent in September and demand for communications gear decreased 4.5 percent after plunging 9 percent in August.

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