U.S. Capital Goods Orders Decline Most Since November

Demand for U.S. capital goods such as machinery and communications gear dropped in July by the most in eight months, a sign manufacturing will contribute less to the economic expansion.

Bookings for non-military capital equipment excluding planes slumped 3.4 percent, a Commerce Department report showed today in Washington. Total orders for durable goods, those meant to last at least three years, jumped 4.2 percent, paced by a 54 percent surge in demand for civilian aircraft.

Possible U.S. tax increases and spending cuts may prompt companies to rein in spending, while a global economic slowdown threatens overseas sales of companies such as Caterpillar Inc. (CAT) and Deere & Co. Federal Reserve policy makers have signaled they are prepared to take further steps to sustain the recovery if growth doesn’t pick up.

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