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Home / Business / Durable goods get a boost from the Pentagon in August, but business investment is still weak

Durable goods get a boost from the Pentagon in August, but business investment is still weak



Reuters

Manufacturers have cut investment and production with export stagnant and trade war with China disrupted business.

Figures: Orders for long-term or durable goods rose slightly in August, but the increase was largely military-related and probably not continuing. Demand was weak in most important industrial segments.

A key business investment target also fell for the second month in a row, reflecting business concerns over the trade war with China and a declining US economy.

U.S. commodity orders increased by 0.2% last month, the government said Friday. Economists surveyed by MarketWatch had forecast a decline of 0.7%.

Still, if the Pentagon order is set aside, bookings dropped 0.6%.

Durable goods are products such as cars, computers or aircraft intended to last for at least three years.

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9659004] Read: Consumer confidence drops to 3-month low on trade concerns, softer labor market

What happened: Orders increased 15% for so-called defense capital goods – things such as fighter jets, ships, tanks and weapon systems. Orders also rose for machinery and primary metals.

However, orders fell sharply for commercial aircraft, but demand also declined for new cars and trucks, computers, network equipment, appliances and electrical equipment.

A key target for business investment known as core orders fell 0.2% in August. These orders have fallen somewhat over the past year, a decline that traces back to the beginning of the spit with China. Just two years ago, core orders increased by a 10% annual cut.

The original reported increase in durable goods orders of 2.1% in July, meanwhile, was revised to 2%.


Big picture: [19659014] The US trade battle with China has not affected consumers as much, but it is another story for the business. Manufacturers have been hit hardest, especially export-heavy companies whose sales abroad have stagnated.

Many companies have put off investments or slowed their hiring until they have a better sense of whether or when the settlement will be resolved. The dispute has disrupted global supply chains, increased supply costs and limited the US economy's modest growth of a modest 2%.

Market Response: Dow Jones Industrial Average

DJIA, -0.30%

and S&P 500

SPX, -0.24%

was set to open mildly higher in the Friday subjects.

The 10-year return on the Treasury

TMUBMUSD10Y, + 0.57%

rose slightly to 1.72%. However, dividends have fallen from a seven-year high of 3.23% in October last year.


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