Fresh signs of resilience emerged from the U.S. manufacturing sector in June as businesses stepped up investment in equipment, reinforcing expectations that the world's largest economy maintained steady growth through the second quarter.
Data released by the Commerce Department's Census Bureau on Monday showed that new orders for non-defense capital goods excluding aircraft — widely regarded as a key indicator of business investment — rose 0.9% in June.
The increase followed an upwardly revised 1.9% gain in May, outperforming economists' expectations of a 0.8% rise after the previously estimated 1.4% increase.
Equipment shipments point to solid second-quarter growth
The report also showed a sharp improvement in shipments of core capital goods, which feed directly into the calculation of business equipment spending in the U.S. gross domestic product (GDP). Shipments climbed 1.9% in June after edging up 0.2% in May, suggesting companies continued to expand capital expenditure despite an uncertain global economic backdrop.
The latest figures strengthen expectations that business investment remained a key pillar of economic activity during the April-June quarter.
The U.S. government is scheduled to release its advance estimate of second-quarter GDP growth on Thursday.
According to a Reuters survey, economists expect the economy to have expanded at an annualised rate of 2.1% during the period, matching the pace recorded in the first quarter.
A major driver of investment continues to be the rapid expansion of artificial intelligence.
Businesses are increasing spending on AI-related infrastructure, boosting demand for information-processing equipment and other technology products. That trend is providing continued support to U.S. manufacturing activity and broader economic growth.
