WASHINGTON: US business investment spending plans increased solidly for a second straight month in April, a hopeful sign for manufacturing activity after a recent long spell of weakness.
The Commerce Department said on Tuesday non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, rose 1.0 percent last month after an upwardly revised 1.5 percent increase in March.
The so-called core capital goods orders were previously reported to have increased 0.6 percent in March.
Business spending has slackened as a sharp decline in energy prices forced oilfield companies, including Schlumberger and Halliburton, to slash their capital expenditure budgets. Investment has also been undermined by a strong dollar, which has squeezed profits of multinational corporations.
The increase in core capital goods offers cautious optimism that business spending outside the energy sector will pick up in the coming months and support manufacturing, and the broader economy, after a dismal first quarter.
Economic growth slumped early in the year and data so far on retail sales and manufacturing point to tepid economic activity early in the second quarter. Signs of modest first-half growth have reduced the likelihood of the Federal Reserve raising interest rates before September.
Economists polled by Reuters had forecast core capital goods orders gaining 0.4 percent.
Shipments of core capital goods, which are used to calculate equipment spending in the government's gross domestic product measurement, rose 0.8 percent last month after an upwardly revised 1.0 percent increase in March.
Shipments in March were previously reported to have increased 0.9 percent.
Last month's increase in core capital goods shipments could see economists bumping up their second-quarter GDP growth estimates.
A 2.5 percent drop in transportation equipment, however, weighed down on overall orders for durable goods - items ranging from toasters to aircraft that are meant to last three years or more - which fell 0.5 percent last month.
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