New orders for key U.S.-manufactured capital goods rose more than expected in August, providing fresh evidence that business investment remained resilient despite higher borrowing costs and uncertainty surrounding the economic outlook.
Non-defense capital goods orders excluding aircraft — a closely watched proxy for business spending plans — increased 1.1% in August, according to Commerce Department data released Friday. Economists surveyed by Reuters had expected a 0.5% increase.
The previous month’s reading was also revised substantially higher, strengthening the evidence that companies continued investing in equipment through the third quarter. Core capital-goods orders were 10.6% higher than a year earlier.
Electrical equipment, appliances and components helped drive the August increase, with orders in that category rebounding 1.1%.
The figures add to recent evidence that U.S. economic activity remains firm. A separate S&P Global survey released earlier this week showed business activity accelerating in September.
Artificial-intelligence infrastructure investment continues to support equipment spending, although the strength is not uniform across manufacturing. Companies outside the AI investment cycle face pressure from elevated interest rates, higher long-term Treasury yields and energy costs associated with the Middle East conflict.
The stronger capital-spending picture matters for financial markets because continued economic resilience can complicate expectations for Federal Reserve policy. Strong investment supports growth, but persistent demand can also make it more difficult for inflation pressures to cool sufficiently for monetary policy to become less restrictive.
Investors will now watch whether the strength carries into actual equipment shipments and whether upcoming employment and inflation reports reinforce the picture of an economy continuing to expand despite tighter financial conditions.
