US Capital Investment Rebounds in June

A gauge of U.S. business investment plans rebounded solidly in June, suggesting the drag on manufacturing from capital spending cuts was starting to ebb.

The slightly upbeat report bolsters the economic growth outlook and supports views the Federal Reserve will raise interest rates later this year. The Fed’s policy-setting committee meets on Tuesday and Wednesday.

The Commerce Department said on Monday non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, increased 0.9 percent last month after an unrevized 0.4 percent drop in May. The increase followed two straight months of declines.

Economists had expected these so-called core capital goods to increase 0.4 percent in June.

U.S. financial markets were little moved by the report as a plunge in Chinese stocks overnight sparked concerns about the global economy. Prices for U.S. government debt rose, while U.S. stock index futures were trading lower.

Deep investment spending cuts in the energy sector in the aftermath of a more than 60 percent plunge in crude oil prices last year have weighed on factory activity. But there are signs that the energy spending rout is close to an end.

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