US Business Spending Falls in September

A key gauge of capital goods orders by U.S. businesses recorded its biggest drop in eight months in September, but the surprise decline was likely to be temporary as business sentiment has been upbeat in recent months.

The Commerce Department said on Tuesday non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, fell 1.7 percent last month.

That was the largest decline in the so-called core capital goods since January of this year, and it followed a 0.3 percent increase in August.

 
The drop last month confounded Wall Street’s expectations for a 0.6 percent gain and was at odds with business surveys that have showed increased business appetite for capital investment.

U.S. stock futures trimmed gains, while U.S. Treasury prices narrowed losses after the data. The U.S. dollar hit a session low against the euro.

With core capital goods declining, overall orders for durable goods – items ranging from toasters to aircraft that are meant to last three years or more – fell 1.3 percent.

It was the second straight month of declines after August’s 18.3 percent tumble. Durable goods orders have been volatile in recent months because of big swings in aircraft orders.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza