According to data from the U.S. Department of Commerce, orders for core capital goods rose by 1.1% in July 2023, indicating renewed business investment activity.
Increase in Capital Goods Orders
The increase in orders, excluding aircraft and military equipment, is seen as a gauge of companies' real investment intentions. While durable goods orders, including planes and tanks, fell by 2.8%, the growth is mainly attributed to businesses' expectations to continue investing in equipment after months of waiting.
Growth in Shipments and Economic Indicators
Shipments of non-defense capital goods, including aircraft, jumped by 3.3%. This figure directly influences GDP calculations. Core capital goods shipments, excluding aircraft and military items, rose by 0.7%. Economists prefer this figure as it is less subject to distortion from large-scale orders that may not impact actual shipments.
Consumer Confidence Levels
Despite the growth in capital investments, U.S. consumer confidence dipped again in August. The Conference Board reported a decline in the consumer sentiment index to 97.4, down from a previously revised 108.7 in July. Consumers are feeling anxious about job stability and income even as businesses upgrade their equipment.
The July data suggests a potential start of a revival in business investment, yet consumer confidence remains under pressure.
