U.S. businesses cut back on their spending plans for a second straight month in July, suggesting slower growth ahead for the factory sector.
The data from the Commerce Department on Friday underscored the toll on the U.S. economy from the uncertainty spawned by the possibility of tighter fiscal policy next year and the debt crisis in Europe.
It led some economists to consider ratcheting back forecasts for economic growth and spurred traders to ramp up bets on further monetary stimulus from the Federal Reserve.
"We are looking at a very soft trend in capital spending in the coming months," said Millan Mulraine, senior economist at TD Securities in New York. "Until we get some clarity on the fiscal outlook and the situation in Europe, the recovery is unlikely to gain the kind of traction needed to make it self-sustaining."
Non-defense capital goods orders excluding aircraft, a closely watched proxy for business investment plans, declined 3.4 percent after falling by a revised 2.7 percent in June.
Economists polled by Reuters had expected a 0.7 percent rise after a previously reported 1.7 percent decline in June.
The weakness in the business spending gauge was in keeping with regional manufacturing surveys showing a cooler growth pace of activity in a sector that has shouldered the economy's recovery from the 2007-09 recession.
Read more: http://www.reuters.com/article/2012/08/24/us-durable-goods-idUSBRE87N0IX20120824
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