Decline in U.S. Manufactured Goods Orders Signals Business Spending Slowdown

New orders for key U.S. manufactured capital goods unexpectedly fell in July, signaling a slowdown in business spending on equipment. Non-defense capital goods orders dipped 0.1%, and core capital goods shipments fell 0.4%. The financial markets expect the Federal Reserve to start easing interest rates soon.

New orders for key U.S.-manufactured capital goods unexpectedly fell in July, signaling a loss of momentum in business spending on equipment that extended into the early part of the third quarter.

According to the Commerce Department's Census Bureau, non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, dipped 0.1% last month. This comes after a downwardly revised 0.5% increase in June, underperforming economists' expectations for unchanged orders post a previously reported 0.9% jump in June.

Business spending on equipment had seen double-digit growth in the second quarter, even amidst significant interest rate hikes by the Federal Reserve. Despite the central bank's benchmark overnight interest rate remaining steady in the 5.25%-5.50% range for over a year, Fed Chair Jerome Powell suggested that rate cuts were imminent due to concerns over labor market weakness.