According to Reuters, demand for key US-made capital goods declined in August following four straight months of gains, and the US’ goods trade deficit widened greatly despite the Trump administration’s efforts to induce the opposite effect, and the decline in key readings is causing economist to begin pulling back their economic growth estimates for 2018’s 3rd quarter.
Key highlights(via Reuters)
With business confidence at multi-year highs, in part buoyed by a $1.5 trillion tax cut package, August’s surprise drop in core capital goods orders is likely to be temporary. But economists worry an escalating trade war between the United States and China could hurt confidence and undercut spending.
The Commerce Department said orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, dropped 0.5 percent last month as demand for computers and electronic products as well as motor vehicles ebbed.
The so-called core capital goods orders rose 1.5 percent in July. Economists polled by Reuters had forecast orders for these goods rising 0.4 percent last month. Core capital goods orders increased 7.4 percent on a year-on-year basis.
Still, growth projections for the quarter remained at lofty levels, with other data on Thursday showing increased investment in wholesale and retail inventories last month. The Federal Reserve raised interest rates on Wednesday for the third time this year, and Chairman Jerome Powell told reporters that this was “a particularly bright moment” for the economy.
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