Weak U.S. Business Spending Plans Point to Slower Economic Growth

A gauge of U.S. business investment plans fell for a second straight month in September, the latest indication that economic growth braked sharply in the third quarter.

The Commerce Department said on Tuesday non-defense capital goods orders excluding aircraft, a closely watched proxyfor business spending plans, slipped 0.3 percent last month after a downwardly revised 1.6 percent decline in August.

These so-called core capital goods were previously reported to have dropped 0.8 percent August. The data was the latest dour news for the manufacturing sector, which has been hobbled by a strong dollar and deep spending cuts in the energy sector.

Manufacturing, which accounts for about 12 percent of the economy, has also been hit by efforts by businesses to reduce an inventory bulge and by slowing global demand.

The downbeat report added to weak trade, retail sales and industrial production data that have suggested the economy lost significant momentum in the third quarter.

According to a Reuters survey of economists, gross domestic product likely expanded at a 1.6 percent annual rate in the third quarter, slowing from a brisk 3.9 percent pace in the second quarter. The government will publish its advance third-quarter GDP estimate on Thursday.

Reuters

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Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.