US August Durable Goods Orders Flat Month-on-Month, Core Capital Goods Orders Rise 1.6% Beating Expectations, Corporate Capex Remains Resilient

US business equipment investment continued to grow at a solid pace in August, indicating that corporate capital spending retains some resilience despite pressures such as elevated interest rates facing the economy.

According to data released by the US Department of Commerce on Friday, US core capital goods orders rose 1.6% month-on-month in August, exceeding market expectations, while the July increase was revised up to 0.6% from the previously reported 0.4%. Core capital goods orders exclude aircraft and military hardware and are an important gauge of business equipment investment.

Judging from the data, the momentum of US business equipment investment has continued to strengthen this year. The August increase in core capital goods orders expanded further compared with July, indicating that corporate demand for machinery, equipment and other capital goods remains relatively strong, and also suggesting that business capital spending may continue to provide support for economic growth.

By contrast, total US durable goods orders were essentially flat in August, versus expectations of -0.3%, a significant decline from the previous reading of 1.1%. This measure covers goods expected to last at least three years and also includes commercial aircraft and military equipment. The number of orders Boeing received in August fell compared with July, which also weighed to some extent on overall durable goods orders.

An important signal from this data release is that, after excluding large and highly volatile items such as aircraft, US business equipment investment is still maintaining relatively strong growth. This means that the growth in corporate capital spending does not rely entirely on a single industry such as aviation, and demand for core equipment still shows a degree of resilience.

Against the backdrop of a repricing of US economic growth and financing costs that remain at high levels, the strong performance of core capital goods orders will also become an important indicator for the market in assessing business investment and the resilience of economic growth.