WASHINGTON, Oct 27 (Reuters) – New orders for key US-manufactured capital goods increased in September and shipments of these products surged, suggesting business spending on equipment maintained a robust growth pace in the third quarter, though doubts are mounting over the huge cost of building out AI infrastructure.
Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, rose 0.5% last month after an unrevised 1.6% jump in August, the Commerce Department’s Census Bureau said on Tuesday.
Economists polled by Reuters had forecast these so-called core capital goods orders would advance by 0.7%.
Shipments of core capital goods, which go into the calculation of the business spending on equipment component in the gross domestic product report, vaulted 1.2% last month after gaining 0.6% in September.
Business spending on equipment has experienced two straight quarters of double-digit growth, largely fueled by aggressive investment in AI, helping to underpin manufacturing and the overall economy.
Economists expect the government’s advance estimate of gross domestic product on Thursday to show the economy grew at more than a 3.0% annualized rate in the third quarter. But investors are increasingly focusing on the rising costs of long-term projects in which the payoff is uncertain. Tech firms have borrowed huge sums over the past year for AI spending.
(Reporting by Lucia Mutikani; Editing by Paul Simao and Chizu Nomiyama)
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