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Business Spending on Equipment Drops in December

Businesses spent significantly less on equipment in December 2018, fueling economists' beliefs that economic growth is in trouble. According to a Reuters report on Feb. 21, data from the Commerce Department shows a 0.7% decline in non-defense capital goods spending—as opposed to economists' predictions of a 0.2% gain—while the shipment of said goods improved month-over-month (MoM).

Concerns of the country's economic growth began last week when additional government data found low factory activity, home resales and retail sales, Reuters reported. Despite a series of increases to interest rates, the Federal Reservice left the rate unchanged after its meeting in late-January.

"Core capital goods orders increased 6.1% on a year-on-year basis," Reuters states. "… While the rebound in core capital goods shipments suggests continued moderate growth in business spending on equipment in the fourth quarter, the surprise drop in orders points to weakness in the months ahead."

However, Reuters noted business spending on equipment has decreased since 2018's second quarter.

—Andrew Michaels, editorial associate

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Saturday, 23 March 2019