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Capital goods spending increase in June, bolsters hope of faster economic growth

July 27
9:10 AM 2013

US capital goods spending arose in June after slowing down in the first half of the year. Factory activity regained momentum, bolstering hopes that faster economic growth for the second half of 2013 was in the offing. The Commerce Department revealed that non-defense capital goods orders, a gauge for planned business spending, rose to 0.7% last month. In May, the gain was also substantial at 2.2%. Senior RBC Capital Markets Economist Jacob Oubina saw the increase as a positive sign. "That seems to portend an increase in capex as we roll into the third quarter and suggests that third-quarter growth is going to pick-up," he told Reuters.

But the drop in the shipments of the core capital goods or those that are used to computer equipment and software spending in the GDP showed just how stunted the economic growth was in the second quarter. Following a 1.9 increase in May, the core capital goods shipment fell to 0.9 percent in June. 

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