Demand for goods such as machinery and electronics climbed in October by the most in five months, signaling companies are starting to overcome concern the looming fiscal cliff will derail the U.S. economy.
Bookings for non-defense capital goods excluding aircraft, a proxy for future business investment, rose 1.7 percent last month, the most since May, the Commerce Department reported today in Washington. Orders for all durable goods were little changed, beating the median forecast of economists surveyed by Bloomberg that projected a 0.7 percent drop.
Eaton Corp. is among companies saying customers are trying to find ways to meet rising demand even as they are concerned about the $607 billion in tax increases and spending cuts that may take effect next year if lawmakers don’t act. A rebound in business investment combined with gains in housing may point to a pickup in growth next year.
“Demand for durable goods has stabilized,” said Ryan Wang, an economist with HSBC Securities USA Inc. in New York, who forecast an increase of 0.9 percent in total orders. “It’s a positive sign.”
Stock-index futures were little changed after the report. The contract on the Standard & Poor’s 500 Index maturing in December was at 1,403.2 at 8:50 a.m. in New York, down less than 0.1 percent from yesterday’s close.
Forecasts for total durable goods of the 75 economists surveyed by Bloomberg ranged from a 4 percent drop to a 2.7 percent increase.
The Commerce Department said no companies in the durable goods survey reported that production was disrupted by superstorm Sandy.
Demand for capital goods excluding defense equipment and aircraft, including items such as computers, engines and communications gear, climbed after a revised 0.4 percent drop in September that was larger than previously forecast.
Orders for electrical equipment and appliances increased 4.1 percent, the most since August 2011, and demand for communications gear jumped 11.4 percent, the most since February. Machinery bookings climbed 2.9 percent after increasing 8 percent in September.
Conversely, shipments of those capital goods, used in calculating gross domestic product, decreased 0.4 percent in October, a fourth consecutive decline, indicating that business investment may remain weak this quarter.