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US business spending plans slumped sharply as debt fight heated up

A worker reaches for glass to assemble a double-pane window frame at Crystal Windows & Doors IL Manufacturer in Chicago.
Tim Boyle | Bloomberg | Getty Images
A worker reaches for glass to assemble a double-pane window frame at Crystal Windows & Doors IL Manufacturer in Chicago.

Orders for a wide range of U.S.-made capital goods sank more than previously estimated in September, a sign companies cut their investment plans sharply as Washington hurtled to the brink of default.

New orders of non-military capital goods other than aircraft, an indicator of business spending plans, fell 1.3 percent during the month, the Commerce Department said on Monday.

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The data suggest businesses may have shut their wallets as a political impasse threatened to lead the government to miss payments on its obligations, although firms also might have been trimming investment plans over doubts regarding the economy's strength. Previously, the government had estimated that the gauge of business spending plans dropped 1.1 percent in September.

A surge in volatile aircraft orders helped push overall orders of factory goods to rise 1.7 percent, in line with the expectations of economists polled by Reuters.

The government impasse was eventually resolved in October, though not before a partial government shutdown left hundreds of thousands of people out of work for weeks and also delayed the release of a slew of economic data, including Monday's data on factory orders.

The report showed overall new orders for factory goods slipped 0.1 percent in August.

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Shipments for the core capital goods category, which strips out aircraft and military wares and also directly feeds into the Commerce Department's calculations of economic growth, fell 0.2 percent in September.

By Reuters

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