Business investment showed signs of stalling in September, an indication that worries over a possible sharp tightening in the federal budget are already weighing on the economy.
Other data on Thursday showed the number of Americans filing new claims for unemployment benefits fell last week, a fresh sign the labor market is slowly healing.
New orders for capital goods outside of defense and excluding aircraft -- a proxy for business spending plans -- was unchanged last month at $60.3 billion, Commerce Department data showed. Analysts polled by Reuters had expected a modest gain.
The reading highlighted concerns that companies are holding back investments due to fears the U.S. Congress could fail to avert sharp tax hikes and spending cuts in 2013, which threaten to send the country back into recession.
"The slowdown in business fixed investment during the second half of the year is even more pronounced than feared," said Harm Bandholz, an economist at UniCredit in New York.
Shipments of non-defense capital goods other than aircraft, which go into the government's estimates for economic growth, fell for the third straight month. As a result, JPMorgan lowered its estimate for third-quarter economic growth by two tenths of a point to a 1.6 percent annual rate.
The investment readings were part of a larger report that showed orders for long-lasting factory goods last month posted their biggest gain since January 2010. However, the rise was fueled by a spike in volatile aircraft orders and failed to make up ground lost in August.
Manufacturing has been a major driver of the recovery from America's 2007-09 recession, but now is beset by softer demand at home and abroad. The European debt crisis has suppressed orders at factories around the world, from China to the United States and Latin America.
Read more: http://www.reuters.com/article/2012/10/25/us-usa-economy-idUSBRE89N1AM20121025
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