August Capital Good Shipments

September 27, 2006 – Real U.S. shipments of non-defense capital goods excluding aircraft rose by 0.5% in August, extending July’s 1.8% gain (Chart 1).

Chart 1. Real non-defense capital good shipments ex aircraft. Percent change. Monthly and 3-month moving average. January 2000 through August 2006.

For the twelve months through August, real shipments of non-defense capital goods excluding aircraft rose by a sturdy 6.9% (Chart 2).

Chart 2. Real non-defense capital good shipments ex aircraft. Year-ago percent change. January 1987 through August 2006.

Compared to their Q2 average, real shipments of non-defense capital goods excluding aircraft rose at an 8.7% annual rate in the first two months of Q3 (Chart 3). For all of Q2, these shipments rose at a 3.2% annual rate.

Chart 3. Real non-defense capital good shipments ex aircraft and real business fixed investment in equipment and software. Annualized percent change. Q1 2000 through Q2 2006 and Q3 to date.

According to the BEA’s preliminary GDP report, real business fixed investment in equipment & software fell at a 1.6% annual rate in Q2. As of August, these data on capital good shipments were pointing to a rebound in Q3.

Business equipment & software investment accounts for about 7.5% of U.S. GDP.

Suzanne Rizzo

Sources:

U.S. Department of Commerce, U.S. Census Bureau (http://www.census.gov) - manufacturers’ shipments of non-defense capital goods excluding aircraft.
U.S. Department of Labor, Bureau of Labor Statistics (http://www.bls.gov) - the Producer Price Index (PPI) for finished capital goods (used to calculate real shipments).
U.S. Department of Commerce, Bureau of Economic Analysis (http://www.bea.gov) - real fixed investment in business equipment & software, GDP.
National Bureau of Economic Research (http://www.nber.org) - recession dates.