Companies spend less on hardware
WASHINGTON -- Com panies are holding off on purchases of computers, industrial equipment and other long-lasting manufactured goods, a trend that’s slowing the U.S. economy.
A fourth straight month of low corporate spending led many economists on Thurs day to trim their forecasts for growth in the July-September quarter. The government will issue its first estimate of third-quarter growth Friday, the last snapshot of overall economic activity before the presidential election.
The troubling report on business confidence accompanied a drop in applications for unemployment aid and a slight increase in the number of people who signed contracts to buy homes.
Economists pay attention to core capital goods, which in clude machinery and computers but exclude aircraft. Those orders were unchanged in September after a slight gain in August and steep declines in July and June.
Such spending has slumped even as consumers have be come more hopeful about the economy in recent months. Consumer confidence rose in October to a five-year high. Retail spending in creased in September, mainly because Americans bought more cars, iPhones and appliances. And home sales are up this year, contributing to a nascent housing recovery.
Consumer spending drives nearly 70 percent of economic activity. The job market has been a key topic in this year’s presidential election.
Weekly applications for un employment benefits fell last week to a seasonally adjusted 369,000, stabilizing after two weeks in which seasonal factors distorted the data.
The four-week average, a less volatile measure, rose to 368,000, the Labor Department said.
Applications are a proxy for layoffs. When they fall below 375,000, it suggests hiring is strong enough to lower the unemployment rate.
Applications have fluctuated between 360,000 and 390,000 since January. At the same time, employers have added an average of nearly 150,000 jobs a month. That’s barely enough to lower the unemployment rate, which has declined from 8.3 percent to 7.8 percent this year.
A third report Thursday showed the housing recovery may be cooling off. The National Assocation of Realtors index of sales agreements showed the number of Americans who signed contracts to buy homes rose only slightly in September from August. That suggests sales may level off in the coming months after solid gains in the past year.
Signed contracts are up 14.5 percent from a year ago.
Housing is rebounding after a six-year slump. New home sales jumped last month to the highest annual pace in two and a half years. And builders broke ground on new homes and apartments at the fastest pace in more than four years in September.
This year will likely be the first time in six years that housing contributes to overall economic growth.
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