• Home
  • Mail
  • News
  • Finance
  • Sports
  • Entertainment
  • Search
  • Mobile
  • More...
YAHOO_FINANCE
  • Sign in
  • Mail
    Sign in to view your mail
Finance Home
    • Coronavirus
    • Watchlists
    • My Portfolio
    • Screeners
    • Premium
    • Markets
    • News
    • Personal Finance
    • Videos
    • Industries
    • Tech
    U.S. markets closed
    • S&P 500
      3,193.93
      +81.58(+2.62%)

    • Dow 30
      27,110.98
      +829.16(+3.15%)

    • Nasdaq
      9,814.08
      +198.27(+2.06%)

    U.S. business spending on equipment cooling; labor market strong

    By Lucia Mutikani
    ReutersApril 26, 2018
    Reblog
    Share
    Tweet
    Share
    Job seekers and recruiters gather at TechFair in Los Angeles
    FILE PHOTO: Job seekers and recruiters gather at TechFair in Los Angeles, California, U.S. March 8, 2018. REUTERS/Monica Almeida

    By Lucia Mutikani

    WASHINGTON (Reuters) - New orders for key U.S.-made capital goods fell in March, weighed down by the biggest decline in demand for machinery in nearly two years, and a drop in shipments cemented expectations that business spending on equipment slowed in the first quarter.

    But other data on Thursday showed the economy remains on a strong footing. The number of Americans filing for unemployment benefits fell to the lowest level in more than 48 years last week and the goods trade deficit narrowed sharply in March amid strong export growth.

    "The U.S. economy is still moving higher," said Chris Rupkey, chief economist at MUFG in New York. "The pullback in goods orders from companies is not a red flag for the economic outlook yet even if the caution light should be left on."

    The Commerce Department said orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, slipped 0.1 percent last month. Data for February was revised to show these so-called core capital goods increasing 0.9 percent instead of the previously reported 1.4 percent jump.

    Economists polled by Reuters had forecast core capital goods orders rising 0.5 percent last month. Core capital goods orders increased 6.5 percent on a year-on-year basis.

    Last month, orders for machinery fell 1.7 percent, the biggest decline since April 2016, after a gain of 0.3 percent in February. There were, however, increases in orders of primary metals, computers and electronic products, fabricated metals and electrical equipment, appliances and components.

    Overall orders for durable goods, items ranging from toasters to aircraft that are meant to last three years or more, increased 2.6 percent in March as demand for transportation equipment rose 7.6 percent. That followed a 3.5 percent surge in durable goods orders in February.

    Shipments of core capital goods declined 0.7 percent last month after a downwardly revised 1.0 percent increase in February. Core capital goods shipments are used to calculate equipment spending in the government's gross domestic product measurement.

    They were previously reported to have vaulted 1.4 percent in February. Business spending on equipment likely cooled in the first quarter after double-digit growth in the second half of 2017. The moderation in equipment investment is expected to have combined with a sharp slowdown in consumer spending to restrain economic growth in the first quarter.

    U.S. Treasury yields held at lower levels after the data. The dollar <.DXY> rose against a basket of currencies. Stocks on Wall Street were trading higher as strong earnings from Facebook <FB.O> and a handful of chipmakers powered technology shares.

    According to a Reuters survey of economists, GDP growth likely slowed to a 2.0 percent annualized rate in the first three months of the year. The economy grew at a 2.9 percent pace in the fourth quarter. The government will publish its advance estimate of first-quarter GDP on Friday.


    FISCAL STIMULUS

    The anticipated slowdown in economic growth is likely to be temporary against the backdrop of a robust labor market that is expected to underpin consumer spending. The economy is also expected to get a boost from the Trump administration's $1.5 trillion income tax cut package as well as increased government spending, which should also support business investment.

    "We still expect investment growth to pick up over the rest of the year, as tax cuts boost domestic demand and capacity constrains bite," said Michael Pearce, a senior U.S. economist at Capital Economics in New York.

    In a separate report on Thursday, the Labor Department said initial claims for state unemployment benefits dropped 24,000 to a seasonally adjusted 209,000 for the week ended April 21, the lowest level since December 1969. Economists polled by Reuters had forecast claims falling to 230,000 in the latest week.

    The labor market is considered to be near or at full employment. The unemployment rate is at a 17-year low of 4.1 percent, not far from the Federal Reserve's forecast of 3.8 percent by the end of this year.

    "The tight labor market keeps getting tighter," said John Ryding, chief economist at RDQ Economics in New York. "Companies are extremely reluctant to release labor, presumably because of the difficulty in replacing workers."

    A third report from the Commerce Department showed the goods trade deficit fell 10.3 percent to $68.0 billion in March. Exports rose $3.4 billion to $140.1 billion last month, reflecting a strengthening global economy and weak U.S. dollar. Imports fell $4.4 billion to $208.1 billion in March.

    The department also reported that wholesale inventories rose 0.5 percent last month. Retail inventories, however, fell 0.4 percent. The goods trade deficit and inventory data had a marginal impact on first-quarter GDP estimates.


    (Reporting by Lucia Mutikani; Editing by Paul Simao)

    Reblog
    Share
    Tweet
    Share
    Recently Viewed
    Your list is empty.

    What to Read Next

    • Why Take-Two Interactive's Lower Guidance Isn't as Bad as It Looks

      Motley Fool
    • The latest jobs numbers are unexpected. This could be very good news for our future after coronavirus

      The Independent
    • 5 Picks for Solid Returns Amid Coronavirus-Led Gaming Surge

      Zacks
    • Coronavirus: Online sales hit decade high even as confidence plummets

      Yahoo Finance UK
    • Wary Canadians start spending as COVID-19 restrictions ease, boosting economy

      Reuters
    • Analyst who predicted market's 40% rally says these stocks will lead to all-time highs

      Yahoo Finance
    • Zumper CEO on how coronavirus has impacted the rental market

      Yahoo Finance Video
    • Billionaire Jim Simons Snaps Up These 3 Penny Stocks

      TipRanks
    • How protests spurred Corporate America into action on race, inequality

      Yahoo Finance
    • This week in Trumponomics

      Yahoo Finance Video
    • D.C.’s 16th & H: Network Reporters Talk About Covering A “Surreal” Week Of Protests Near The White House

      Deadline
    • Coronavirus stimulus: Surprise jobs report adds doubt to second round

      Yahoo Finance
    • ‘Astonishing’: Dumbfounded economists struggle to describe today’s jobs report surprise

      Yahoo Finance
    • Historic jobs report signals fragile recovery. ‘I didn’t hire a single person back,’ says NYC restaurant owner

      Yahoo Finance
    • Bill Gates on coronavirus: 'The world needs more than breakthrough science'

      Yahoo Finance
    • 'We're still trying to figure out what's missing and what's damaged': LA small business owner on aftermath of looting

      Yahoo Finance Video
    • Why Tencent Music Entertainment Stock Climbed 13.2% Last Month

      Motley Fool