WASHINGTON (Reuters) - New orders for key U.S.-made capital goods increased for a seventh straight month in November, suggesting business investment could offset slowing consumer spending and keep the economy on a moderate growth path in the fourth quarter.
Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, rose 0.4% last month. These so-called core capital goods orders jumped 1.6% in October. Economists polled by Reuters had forecast core capital goods orders increasing 0.7% in November. Core capital goods orders increased 0.8% year-on-year in November.
The COVID-19 pandemic has shifted demand away from services like travel and hospitality towards goods. Orders last month were boosted by demand for electrical equipment, appliances and components, computers and electronic products, primary metals and machinery.
Shipments of core capital goods increased 0.4% last month. Core capital goods shipments are used to calculate equipment spending in the government's gross domestic product measurement. They surged 2.6% in October.
Business investment on equipment rebounded strongly in the third quarter after five straight quarterly declines. Spending on equipment could help to blunt the impact of slower consumer spending on GDP growth in the fourth quarter. Consumer spending is being hampered by a resurgence in new coronavirus infections and a delay by Congress to approve another rescue package.
Growth estimates for the fourth quarter are mostly below a 5% annualized rate. The economy rebounded at a record 33.4% rate in the third quarter after contracting at a 31.4% pace in the April-June period, the deepest since the government started keeping records in 1947.
Orders for durable goods, items ranging from toasters to aircraft that are meant to last three years or more, rose 0.9% in November after advancing 1.8% in October.
Durable goods orders were lifted by 1.9% jump in orders for transportation equipment, which followed a 1.5% advance in October. Orders for civilian aircraft fell 2.8%. A rebound in likely after the government ended a 20-month grounding of Boeing (NYSE:BA)'s best-selling 737 MAX jets after two crashes in Indonesia and Ethiopia.
Orders for motor vehicles and parts increased 2.4% in November.