Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, rose 0.7% last month, the Commerce Department said on Wednesday. These so-called core capital goods orders decreased 0.8% in September.
Economists polled by Reuters had forecast core capital goods orders would be unchanged. The data is not adjusted for inflation. Core capital goods increased 9.2% on a year-on-year basis in October.
There were increases in orders for machinery, computers and electronic products as well as electrical equipment, appliances and components. But primary metals orders slipped.
Shipments of core capital goods jumped 1.3% after dipping 0.1% in September. Core capital goods shipments are used to calculate equipment spending in the gross domestic product measurement.
Business spending on equipment rebounded sharply in the third quarter after contracting in the second quarter. The Federal Reserve’s rate-hiking cycle is the most aggressive since the 1980s.
Despite the rebound in core capital goods orders and shipments last month, manufacturing is slowing as higher borrowing costs dampen demand for goods. The sector, which accounts for 11.3% of the U.S. economy, is also being hobbled by a strong dollar due to tighter monetary policy, as well as an inventory overhang and weak global demand.
Orders for items ranging from toasters to aircraft that are meant to last three years or more accelerated 1.0% in October after rising 0.3% in September. They were boosted by a 2.1% increase in orders for transportation equipment, which followed a 2.5% surge in September.
Motor vehicle orders gained 0.6%. Orders for the volatile civilian aircraft category rose 7.4% after soaring 23.4% in September. Boeing said on its website it had received 122 aircraft orders last month, compared to 96 in September.
(Reporting by Lucia Mutikani; Editing by Paul Simao)