Companies remain cautious ahead of the general election, with nearly zero growth in commercial equipment orders in the United States in August

According to the Zhitong Finance and Economics APP, in August, commercial equipment orders at U.S. factories only saw a slight increase, indicating that businesses are limiting investments in the United States before the presidential election and further reduction in borrowing costs. Data released by the U.S. Department of Commerce on Thursday showed that the value of core capital goods orders (representing equipment investment excluding aircraft and military hardware) increased by only 0.2% last month, compared to a 0.2% decline in July. These data have not been adjusted for inflation. Due to a decrease in commercial aircraft orders, orders for all durable goods (items used for at least three years) have stagnated. Excluding transportation equipment, durable goods orders increased by 0.5% on a monthly basis. Despite many companies still committed to long-term investments, the uncertainty surrounding the November presidential election and future demand has made businesses cautious about expansion plans. This suggests that factory production may struggle to maintain growth momentum in the coming months. Meanwhile, after the Federal Reserve cut interest rates by 50 basis points this month, the possibility of lower financing costs over the next year may help boost demand and encourage businesses to proceed with investment plans. After a 0.4% decline in July, core capital goods shipments (data used in the government's Gross Domestic Product (GDP) report to help calculate equipment investment) increased by 0.1%. Prior to the release of this report, the Atlanta Federal Reserve Bank's GDPNow forecast indicated an increase in business equipment spending in the third quarter. Another data released on Thursday showed that business equipment spending in the second quarter grew at an annual rate of nearly 10%. This, coupled with the recovery in consumer spending, helped drive the seasonally adjusted annualized GDP growth rate to 3%. The U.S. Department of Commerce's durable goods report indicated that commercial aircraft bookings fell by 7.5% after rebounding in July. Boeing (BA.US) reported 22 orders in August, down from 72 orders a month earlier. A strike by Boeing workers shut down several factories in the Pacific Northwest for over a week, and union negotiators also ruled out the possibility of a quick resolution to the deadlock. It is worth noting that while comparing the two is often helpful, aircraft orders are volatile, and government data is not always directly related to monthly data from aircraft manufacturers. Furthermore, recent Purchasing Managers' Index (PMI) surveys indicate that the manufacturing sector is facing challenges. The U.S. ISM Manufacturing Index contracted for the fifth consecutive month in August, while the S&P Global Manufacturing Index for September fell to its lowest level since June 2023