Orders for U.S. equipment such as computers and electrical gear barely rose in September, pointing to a slowdown in business investment that will weigh on growth.
Bookings for non-defense capital goods excluding aircraft, a proxy for future spending, rose 0.2 percent after advancing 0.3 percent in August and dropping 5.6 percent in July, Commerce Department data showed today in Washington. Total factory orders jumped 4.8 percent, the most since March 2011 and led by a rebound in aircraft demand.
Companies from Caterpillar Inc. to General Electric Co. have cut forecasts, a reminder that business investment will no longer bolster the world’s largest economy as it did earlier in the recovery. The outlook for manufacturers may remain dim as overseas demand cools and concern mounts that the so-called fiscal cliff may not get averted by the end of 2012.
“We’re likely to be in a holding pattern in the next few months,” Millan Mulraine, senior U.S. strategist for TD Securities in New York, said before the report. “Manufacturing will stall out as it is going to follow spending, both globally and domestically.”
The median forecast of 59 economists in a Bloomberg survey called for a rise of 4.6 percent in total factory orders. Estimates ranged from gains of 2.4 percent to 8 percent. The Commerce Department revised the August figure to a 5.1 percent decrease from a previously reported drop of 5.2 percent.
Another report today showed hiring increased more than forecast in October, indicating employers would rather add staff than increase spending on equipment amid the global uncertainties.
In the last jobs report before next week’s election, a net 171,000 workers were added to payrolls after a 148,000 gain in September that was more than first estimated, according to Labor Department figures. The increase exceeded the most optimistic forecast in the Bloomberg survey in which the median called for an advance of 125,000. Unemployment rose to 7.9 percent as more people entered the labor force.
Excluding transportation equipment, factory orders rose 1.4 percent after a 0.7 percent gain the prior month.
Bookings for durable goods, those meant to least at least three years climbed 9.8 percent. They make up just over half of total factory demand. Today’s reading was in line with the 9.9 percent gain estimated by the government on Oct. 25. Demand for non-durable goods, including petroleum, increased 1 percent.
Boeing Co., the Chicago-based aerospace company, has said it received 143 orders in September, up from 1 the prior month and 260 in July.