US core capital goods orders rise as AI-related equipment spending strengthens

New orders for key U.S.-manufactured capital goods increased strongly in June while shipments surged by the most in 4-1/2 years as businesses ramped up spending on artificial intelligence, Reuters reported from a Commerce Department release. Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, rose 0.9% last month after an upwardly revised 1.9% increase in May, the Census Bureau said. Economists polled by Reuters had forecast a 0.8% advance after a previously reported 1.4% jump in May. Core capital goods orders rose 9.3% year-on-year in June. Reuters said the broad increase was powered by strong demand for computers and electronic products as well as electrical equipment, appliances and components. Orders for computers and electronic products soared 3.1% after rebounding by 1.2% in May. Shipments of core capital goods surged 1.9% after gaining 0.2% in May, the largest advance since December 2021. The wire said the AI build-out is helping limit drag on the economy from the five-month war in the Middle East and lingering tariffs on imports. A Reuters survey of economists estimated the economy grew at a 2.1% annualized rate in the second quarter. Economists expected another quarter of double-digit growth in business spending on equipment.