US core capital goods orders and shipments rebound in April

In April, new orders for important U.S.-made capital goods saw a stronger rebound than expected, indicating a potential increase in business spending on equipment at the beginning of the second quarter. Non-defense capital goods orders excluding aircraft, which are a key indicator of business spending plans, rose by 0.3% last month after a slight dip in March. Economists had predicted a smaller increase of 0.1%. Core capital goods shipments also went up by 0.4% after a decrease in March. Business spending on equipment showed a slight improvement in the first quarter after two consecutive declines, contributing slightly to the economy’s 1.6% growth rate. However, investment has been affected by interest rate hikes by the Federal Reserve since March 2022, leading to decreased demand for goods and higher financing costs for businesses. Economists anticipate the Federal Reserve to begin easing its policies in September after keeping its policy rate steady between 5.25% and 5.50% since July.