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U.S. core capital goods orders beat expectations in September

WASHINGTON, Oct 25 (Reuters) - New orders for key U.S.-made capital goods increased more than expected in September and shipments rose for an eighth straight month, suggesting business spending on equipment remained robust in the third quarter.

The Commerce Department said on Wednesday non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, rose 1.3 percent last month after an upwardly revised 1.3 percent increase in August.

Economists polled by Reuters had forecast orders of these so-called core capital goods increasing 0.5 percent last month after a previously reported 1.1 percent jump in August. Core capital goods orders advanced 3.8 percent year-on-year.

Shipments of core capital goods climbed 0.7 percent after soaring 1.2 percent in August. Core capital goods shipments are used to calculate equipment spending in the government's gross domestic product measurement.

The Commerce Department said it was unable to isolate the effects of Hurricanes Harvey and Irma on the data as the survey is "designed to estimate the month-to-month change in manufacturing activity at the national level and not at specific geographic areas."

Core capital goods shipments have now increased for eight straight months. Business spending on equipment is expected to have contributed to economic growth in the third quarter, which could help to limit the drag on GDP from the hurricanes.

The government is due to publish its advance GDP estimate for the third quarter on Friday. According to a Reuters survey of economists, the economy probably grew at a 2.5 percent annualized rate in the July-September period, slowing down from the second quarter's brisk 3.1 percent pace.

Strong business spending on equipment is helping to support manufacturing, which accounts for about 12 percent of the U.S. economy.

Last month, orders for computers and electronic products increased 1.6 percent after surging 1.8 percent in August. There were also increases in orders for fabricated metal products. But orders for machinery, primary metals and electrical equipment, appliances and components fell.

Overall orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, shot up 2.2 percent last month amid a 5.1 percent rise in demand for transportation equipment. Durable goods orders increased 2.0 percent in August.

Boeing reported on its website that it received 72 aircraft orders in September, up from 33 the prior month.

Orders for motor vehicles and parts edged up 0.1 percent last month after accelerating 2.8 percent in August. (Reporting by Lucia Mutikani; Editing by Andrea Ricci)