Economic News Blog
Posted by: Steven Kline, Jr. 17. June 2013

Real Capital Goods Orders Grow for First Time in 2013

According to the Census Bureau, real capital goods new orders in April 2013 were $77,455 million. This is an increase of 3.1% compared to April 2012. This is the first month-over-month increase in 2013 and only the third month-over-month increase since August 2012. The annual rate of change contracted for the fourth consecutive month. However, the rate of contraction has been farily constant the three months. Real capital goods new orders could be nearing a bottom, which would be a positive sign for durable goods manufacturing and capital equipment spending.

A good leading indicator for real capital goods orders is real consumer spending. As consumers spend more on all goods, business need more capital equipment to make the goods consumers are buying. The last five months have shown growth in the month-over-month rate of change for real consumer spending of more than 2.0%. This is below the historical average of 3.2%. The annual rate of change looks to have bottomed and may start showing accelerating growth in the next couple of months. This would be a positive sign for real capital goods new orders. 

We use real capital goods orders to forecast activity in metalcutting job shops, durable goods, and metalworking.

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