WASHINGTON (Reuters) – New orders for key capital goods manufactured in the United States increased in July, speed slowed from the June forged profit, suggesting that the uptick in business investment would be slow amid uncertainty about the course of the COVID-19 pandemic.
Wednesday’s Department of Commerce report showed an asymmetric recovery in investment as the coronavirus crisis shifts spending on appliances used in service industries such as restaurants and bars to purchases of similar household electronics.
“Since orders have almost returned to pre-pandemic levels, the slowdown in profits suggests that the activity will take some time to recover,” said Lydia Boussour, Senior American Economist at Oxford Economics in New York.
“We do not expect business investment to succeed in prepandemic degrees until mid-2022. “
Orders for non-defence capital goods aircraft, a well-observed indicator of business spending plans, increased by 1. 9% last month. These orders for key capital goods increased by 4. 3% in June, the largest accumulation in six years.
Orders for key capital goods are below their pre-pandemic level. They fell 1. 9% a year in July. The accumulation of orders last month met economists’ expectations.
Graphic: Basic equipment here
Although new cases of coronavirus have been alleviated after a giant resurgence after the reopening of business in May, the road to the pandemic remains unclear, with many remaining hot spots. Symptoms are developing that the economic recovery of the pandemic is slowing down or even reversed.
At least 28 million others are receiving unemployment benefits and bankruptcies are expanding as government assistance at the start of the pandemic runs out. Federal Reserve regional surveys showed a moderation in plant activity in New York State and the Mid-Atlantic regions this month. confidence fell to a six-year low in August.
“Trends in economic signs have not particularly replaced,” Bank of America Securities economists wrote in a study note. “We probably want COVID-19 cases to be minimized much more particularly so that economic gains increase particularly. “
The recession entered in February.
Wall Street shares traded upwards. The dollar. DXY has recently replaced a basket of coins. Treasury costs have dropped.
Orders for key capital goods last month were backed by calls for machinery, steel products, computers and electronics, as well as equipment, appliances and electrical components. Orders for fundamental capital goods in the e-book were exchanged a slight accumulation of 0. 1%. a gain of 0. 2% in June.
“The recovery remains asymmetrical between investments that complement COVID-life and non-COVID life,” said Sarah House, senior economist at Wells Fargo Securities in Charlotte, North Carolina. “Computer and communications orders exceeded February levels, while orders for machinery and metals continue to widen the gap left by closures and customers for lower profits. “
Shipments of key capital goods rose 2. 4%. Shipments of fundamental capital goods are used to calculate capital expenditures as a measure of the government’s gross domestic product. They rose 3. 8% in June, but remain 0. 4% below their February level.
The closure of secondary businesses in mid-March and the collapse of oil costs have contributed to mining business investment, which is already affected by the Trump administration’s industrial war with China.
Business investment fell to a record annualized rate of 27% in the quarter of the moment, with capital spending collapsing to 37. 7% record. Investment in gadgets has been invested for five consecutive quarters.
Economists expect the government to report a historic drop in corporate earnings for a quarter on Thursday when it publishes its GDP estimate for the last quarter.
Orders for durable goods, from toasters to aircraft expected to last 3 years or more, increased by 11. 2% in July after emerging by 7. 7% in June. Orders for durable goods recovered the losses suffered by the closure and have almost returned to their pre-pandemic state. Level.
Orders for durable goods were driven by strong demand for cars, which increased by 21. 9% after an acceleration of 85. 6% in June. No orders for civilian aircraft were reported. June. Motor cars have a higher weight in the shipping category.
Boeing (BA. N) reported that there were no aircraft orders in July after receiving only one in June. The plane maker has struggled to cope with cancellations as airlines grapple with a severely reduced air call due to the pandemic.
The grounding of Boeing’s best-selling 737 MAX aircraft since March 2019 after two injuries in Indonesia and Ethiopia has affected the company.
Orders for goods in the eBook fell by 0. 8% in July after falling by 1. 4% in June, while goods inventories decreased by 0. 5%.
Reporting through Lucia Mutikani; Edited through Chizu Nomiyama, Paul Simao and Andrea Ricci
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