USA: Fall of Business Equipment Orders

The orders given to the American factories for business were reduced in July 2024, while last month’s increase was revised lower, suggesting that businesses are more cautious in terms of . The value of basic capital goods orders, a substitute for investments in equipment that does not include aircraft and military material, decreased by 0.1% last month after a revised 0.5% increase in June, as indicated by the trade ministry figures today (26.8.2024). Reservations for all lasting goods – those intended to last at least three years – jumped 9.9%. Except for transport equipment, orders decreased by 0.2%, according to Bloomberg’s publication. Although many businesses are still committed to making long-term investments, uncertainty about presidential elections and future demand has caused businesses to limit expansion plans. This suggests that factory production can fight for dynamics in the coming months. At the same time, the prospects that the US Federal Reserve will reduce interest rates and help boost demand have the potential to encourage companies to move on to new investments. Missions of basic capital goods, a number used to help calculate investment in equipment in the government’s gross domestic product report, decreased by 0.4% at the beginning of the third quarter. Prior to the report, Atlanta Fed’s GDPNow forecast provided for a slight increase in business costs for equipment for the period July – September. The Ministry of Commerce report showed that the level of reservations for commercial aircraft, which is volatile from month to month, recovered sharply after its vertical fall by the highest percentage since mid-2020. Boeing reported 72 orders in July, against 14 in June. The company’s commercial aircraft deliveries show signs of stabilization after one of the most turbulent periods in the company’s history. Although the comparison of the two is often useful, aircraft orders are volatile and government elements are not always associated with the monthly data of aircraft manufacturers. Recent market managers surveys have shown that processing in the US is struggling for dynamics. The Institute’s processing index for Supply Management earlier this month showed that factory activity shrunk in July during the largest percentage of the last eight months, while S&P Global Flash’s PMI index in August shrunk at the fastest rate this year.