Surging corporate capital expenditures across AI hardware and computing infrastructure propelled US business spending on equipment in September, reinforcing projections that broader economic growth accelerated robustly throughout the third quarter.
📌 Key Manufacturing & Capex Metrics:
• Core Capital Goods Growth: Non-defense capital goods orders excluding aircraft—a premier proxy for business equipment spending—rose 0.5% in September (following a 1.6% jump in August), climbing 10.9% year-on-year.
• Shipments Surge Vaults GDP Calculation: Core capital goods shipments jumped 1.2% in September (+8.8% YoY), supporting estimates that quarterly business spending on equipment grew at a ~20% annualized rate—marking its third consecutive quarter of double-digit expansion.
• Overall Durable Goods Expansion: Total durable goods orders rose 1.8% (+8.0% YoY), bolstered by a 4.6% rise in transportation equipment and a 28.4% rebound in civilian aircraft orders (anchored by Boeing booking 165 aircraft orders vs. 15 in August).
• Macro Growth Trajectory: Economists forecast Q3 GDP growth at a 3.2% annualized rate (up from 2.2% in Q2), offsetting drag from Middle East supply chain disruptions and elevated energy prices.
📌 Cross-Currents: Inflation, Housing & The Consumer:
• Consumer Confidence Lift (91.7): The Conference Board index rose 7.5 points to 91.7 in October, driven by temporary gasoline relief and an improved labor market differential (5.3% vs. 2.9%), even as grocery price frustration persists ahead of US midterms.
• Housing Squeeze Above 7% Mortgages: FHFA home prices advanced 2.4% YoY in August, while new home sales fell 0.6% in September to 676,000 units (-5.3% YoY) as locked-in inventory offsets elevated borrowing costs.
💡 Market Takeaway: The aggressive race to build out artificial intelligence infrastructure has become the single most durable manufacturing and corporate capex catalyst in the US economy, temporarily insulating macro growth from tight monetary conditions and geopolitical friction.
