Spending On US Goods Falls In August

Date: September 28, 2015

Capital Goods, Durable Goods Orders Down For Month

According to the latest Commerce Department data, capital goods orders excluding military and aircraft declined slightly in August, falling 0.2%. Overall, durable goods orders were down 2% for the month, largely due to a steep decline in civilian aircraft orders. Reuters notes that despite the decline in August, July saw the biggest gain in capital goods orders in more than a year. Capital Economics economist Paul Ashworth said that overall, the data suggests that “investment in equipment appears to be recovering.” The AP noted that commercial aircraft demand fell 5.9% in August, while motor vehicles and parts orders fell 1.6%. August orders for goods in non-transportation categories “were flat,” while machinery orders rose 1% and computer orders fell 5.7%. The AP noted that global demand for goods has been sluggish due to the rising US dollar coupled with a weakening Chinese economy.

What This Means For Small Businesses

The latest Commerce Department data suggest there is some uneven growth on the path towards a full economic recovery, and that some sectors, particularly manufacturing, may be facing particular challenges. The Wall Street Journal suggested this latest monthly data indicated “a slight pullback” in business spending for equipment after two months of increased spending. However, as Stifel Nicolaus chief economist Lindsey Piegza suggested, the data are suggesting a general trend of difficulty for businesses. She explained, “This is not a one-off month, this is a long-standing trend. What describes this recovery is that we’re not seeing business investment. It’s pointing the finger at other issues—regulation, tax uncertainty, rising health-care costs. These are things that can’t be fixed in one quarter’s time.” Small businesses in the manufacturing sector in particular are likely to continue to see anemic growth in the near future without help addressing these broader policy issues.

Additional Reading

NFIB recently noted a survey that found flat growth in US manufacturing.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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