A little good news on Business Equipment Investment

by Laura Ehrenberg-Chesler on August 25, 2016

in Economic Indicators

A report today from the Capital Economics group suggests there is some improvement in business equipment investment. This improvement is likely to lead to a pick in GDP for the second half of the year.

Excluding the transportation category, core durable orders rose by a strong 1.5% m/m, which was much better than the consensus forecast of 0.4%. The 1.6% m/m rebound in non-defence capital goods orders (ex-aircraft) provided further good news, bringing the three-month-on-three-month annualised growth rate up to -1.1%, which was its highest reading since November 2015. The one downside was that shipments in the same category fell by 0.4% m/m.
Overall, the data suggest that, after contracting at a 3.5% annualised pace in the second quarter, business equipment investment may be set for a modest recovery in the third quarter. Admittedly, the latest survey evidence suggests that the upturn in capital orders might not last for long. Nonetheless, now that the drags from mining-related investment and net trade are fading, we still expect GDP growth to pick up over the second half of the year.”

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