U.S. business spending plans slumped sharply as debt fight heated up

WASHINGTON Mon Nov 4, 2013 10:35am EST

Workers assemble built-in appliances at the Whirlpool manufacturing plant in Cleveland, Tennessee August 21, 2013. REUTERS/Chris Berry

Workers assemble built-in appliances at the Whirlpool manufacturing plant in Cleveland, Tennessee August 21, 2013.

Credit: Reuters/Chris Berry

WASHINGTON (Reuters) - Orders for a wide range of U.S.-made capital goods sank more than previously estimated in September, a sign companies cut their investment plans sharply as Washington hurtled to the brink of default.

New orders of non-military capital goods other than aircraft, an indicator of business spending plans, fell 1.3 percent during the month, the Commerce Department said on Monday.

The data suggests businesses may have shut their wallets as a political impasse threatened to lead the government to miss payments on its obligations, and could give the Federal Reserve more reason to leave its bond-buying stimulus program at full throttle for the rest of 2013.

Previously, the government had estimated that the gauge of business spending plans dropped 1.1 percent in September.

"It implies pretty lackluster growth," said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida. "This could be further justification for the Fed to stay the course."

At the same time, other data have suggested factory activity accelerated in October despite the political standoff between President Barack Obama and congressional Republicans.

On Friday, the Institute for Supply Management said U.S. manufacturing sector expanded at its fastest pace in more than two years in October.

Monday's data showed a surge in volatile aircraft orders helped push overall orders of factory goods to rise 1.7 percent, in line with the expectations of economists polled by Reuters.

The data appeared to have little impact on sentiment on Wall Street. U.S. stocks edged higher, as did prices for U.S. government debt, with investors looking ahead to more significant data releases later in the week.

The government impasse was eventually resolved in October, though not before a partial government shutdown left hundreds of thousands of people out of work for weeks and also delayed the release of a slew of economic data, including Monday's data on factory orders.

The report showed overall new orders for factory goods slipped 0.1 percent in August.

Shipments for the core capital goods category, which strips out aircraft and military wares and also directly feeds into the Commerce Department's calculations of economic growth, fell 0.2 percent in September.

(Reporting by Jason Lange; Additional reporting by Richard Leong in New York; Editing by Krista Hughes)

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (7)
Bighammerman wrote:
Obama is the guy who does not care about US businesses. He will invite foreign businesses but will not support domestic business unless they support his lies. Without business there are no private sector jobs. Hope you see what he doing to the country. Obama needs to resign NOW.

Nov 04, 2013 10:22am EST  --  Report as abuse
Timbuk3 wrote:

While it is true that “without business, there are no private sector jobs”, this is hardly a revelation worth posting as a comment, is it?

Thinking through your gut reaction suggestion that the duly elected president should immediately resign, I think that business confidence and the economy and would not immediately improve if he follows your ludicrous suggestion.

“Hope you see what he doing to the country”

Did Obama’s election suddenly lower the education level of this country? Comments like yours make me both embarrassed and sad for the level of political discourse and ignorance in this country.

Nov 04, 2013 10:49am EST  --  Report as abuse
rustic36 wrote:
SERIOUSLY- – you guys still hauling ”water” for the administration. Do you think for one minute anyone further that 10 blocks away from 1600 Penn Ave believes any of this ”BS”? After ”five years” of the ”same”- – Wah / Wah- – do you really believe there is ”ONE” person listening? SAD- – VERY SAD- – ”THE FOLKs DESERVE ”BETTER”! ! !

Nov 04, 2013 11:34am EST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

Recommended Newsletters

Reuters U.S. Top News
A quick-fix on the day's news published with Reuters videos and award-winning news photography and delivered at your choice of one of four times during the day.
Reuters Deals Today
The latest Reuters articles on M&A, IPOs, private equity, hedge funds and regulatory updates delivered to your inbox each day.
Reuters Technology Report
Your daily briefing on the latest tech developments from around the world from Reuters expert tech correspondents.