AI investment boom powers US business spending on equipment in September
SPY•Core capital goods orders rose 0.5% in September and shipments jumped 1.2%, supporting expectations for a third straight quarter of double-digit growth in business equipment spending. Consumer confidence improved in October, while new-home sales fell 0.6%.
1. Equipment spending strengthens
US orders for non-defense capital goods excluding aircraft, a proxy for business spending, rose 0.5% in September after increasing 1.6% in August. Shipments of core capital goods climbed 1.2%, and economists estimated that equipment spending grew at roughly a 20% annualized rate in the third quarter.
2. Growth and investment outlook
Economists surveyed expected the economy to have grown at a 3.2% annualized rate in the third quarter. AI-related investment is supporting manufacturing and economic growth, though economists said rising borrowing costs and uncertainty about long-term project returns could weigh on equipment investment.
3. Confidence and housing data
Consumer confidence rose 7.5 points to 91.7 in October, with consumers more optimistic about the labor market but still concerned about prices. New single-family home sales fell 0.6% in September to a 676,000 annualized rate, while house prices rose 2.4% in the 12 months through August.
