Business Spending Increases More Than Expected
New orders for manufactured durable goods increased by 0.7% in April.
Orders increased by $1.9 billion to $284.1 billion during the month, the U.S. Census Bureau said in a Friday (May 24) press release.
April’s increase in orders for durable goods followed a 0.8% increase in March and marked the third consecutive month of increases, according to the release.
The latest month’s increase was led by transportation equipment, which increased by 1.2%, the release said.
Excluding transportation, new orders increased 0.4% in April, per the release. Excluding defense, they were virtually unchanged.
Non-defense capital goods orders excluding aircraft — a category that is said to signal business spending plans — rose more than expected, Reuters reported Friday.
The Census Bureau reported that figure to be 0.3% in April, higher than the 0.1% that was expected by economist polled by the media outlet, per the report.
The April data suggests a moderate improvement in business spending on equipment, but that investment continues to be constrained by higher borrowing costs, a strong dollar and weak global demand, the report said. Interest rates have lowered demand for goods and raised the cost of financing for businesses.
It was reported in September that a growing number of chief financial officers (CFOs) were trimming spending due to higher interest rates.
Around 40% of CFOs were reducing capital and non-capital spending in the face of the Federal Reserve’s rate hikes, a figure that was up from 32% in the fourth quarter of 2022, according to a survey issued by Duke University’s Fuqua School of Business and the Federal Reserve Banks of Atlanta and Richmond.
The Census Bureau’s report comes on the same day that Treasury Secretary Janet Yellen told the Financial Times (FT) that the high cost of essentials like food, rent and mortgages is weighing on many American consumers.
Yellen said the price increases have been “substantial,” rapid and noticeable to consumers, according to the FT report.
“The cost of living is a problem to a lot of people,” Yellen said, per the report. “So, I think this is a concern that people legitimately have.”
In another recent report, the Federal Reserve said that inflation continues to impact the lives of U.S. consumers, with roughly two-thirds of households saying that high prices have made their financial situations “worse.”
Among the 65% of consumers who said the upward march of prices has had an adverse impact on them financially, 19% of respondents said that their situations were “much worse.”
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