Gauge of investment plans flat, orders for durables up

WASHINGTON, Thu Oct 25, 2012 – A gauge of planned business spending was flat in September, a sign that heightened uncertainty is weighing on factories although new orders for long-lasting manufactured goods increased during the month.

The Commerce Department said on Thursday that non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, was unchanged last month at $60.3 billion. That was short of economists’ expectations for a 0.7 percent gain.

Many economists believe 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 U.S. economy back into recession.

The reading on investment plans was part of a larger report on long-lasting factory goods, which showed new durable goods orders posting their biggest gain last month since January 2010.

New orders for durables rose 9.9 percent, partially reversing a sharp loss in August. Wild fluctuations in aircraft orders have generated much of the volatility.

Economists polled by Reuters had expected orders for durable goods – items from toasters to aircraft that are meant to last at least three years – to rise 7.1 percent.

Boeing received 143 orders in September, up from just one in August, according to information posted on the plane maker’s website.

April consumer prices flat as gasoline, natural gas drops

WASHINGTON, Tue May 15, 2012 – Consumer prices were flat in April as households paid less for gasoline and natural gas, possibly giving the U.S. Federal Reserve more room to help economic growth should the recovery stumble.

The Labor Department said on Tuesday its Consumer Price Index was unchanged last month after rising 0.3 percent in March. April’s increase was in line with economists’ expectations.

Outside the volatile food and energy category, inflation pressures also appeared to be modest. Core CPI edged up 0.2 percent, matching the increase posted in March.

A number of officials at the Fed appear loath to take further action to help the economy, with some arguing the central bank needs to get ready to start removing monetary stimulus.

A separate measure of inflation targeted by the Fed, and which is not included in Tuesday’s report, continues to hover around the central bank’s 2 percent goal.

The Fed has maintained since January that it expects economic conditions to warrant holding interest rates near zero through at least late 2014.

Last month, the CPI index was held back by a 2.6 percent fall in gasoline prices. Natural gas prices dropped 1.8 percent. Prices also fell for fuel oil.

Food prices climbed 0.2 percent last month.

Overall consumer prices rose 2.3 percent year-on-year, down from a reading of 2.7 percent in March. In the 12 months to March, core CPI increased 2.3 percent, the same pace clocked in March.

Rising gasoline prices have helped keep the overall inflation hotter than core inflation in recent years. April was the first month since October 2009 that headline 12-month reading did not exceed the measure of core inflation.

Consumer spending flat in December, savings up

WASHINGTON – Consumer spending was flat in December as households took advantage of the largest rise in income in nine months to boost their savings, setting the tone for a slowdown in demand early in 2012.

The Commerce Department said on Monday spending was the weakest since June and followed a 0.1 percent gain in November.

Economists polled by Reuters had expected spending, which accounts for more than two-thirds of U.S. economic activity, to nudge up 0.1 percent last month. For all of 2011, spending rose 4.7 percent, the largest increase since 2007.

When adjusted for inflation, spending dipped 0.1 percent, breaking three straight months of gains. It increased 0.1 percent in November.

The government reported on Friday that consumer spending grew at a 2.0 percent annual pace in the fourth quarter, helping to lift gross domestic product 2.8 percent – an acceleration from the third-quarter’s 1.8 percent rate.

Part of the spending, which has been concentrated in motor vehicles, has been funded from savings and credit cards as high unemployment constrains wage growth.

Wages rose last month, helping to prop-up incomes. Income advanced 0.5 percent, the largest gain since a matching increase in March, and followed a 0.1 percent rise in November. Economists had expected income to rise 0.4 percent.

Taking inflation into account, disposable income rose 0.3 percent after being flat the prior month. With disposable income outstripping spending, the saving rate rose to 4.0 percent from 3.5 percent in November.

Savings increased to annual rate of $460.1 billion, the highest since August, from $407.8 billion the prior month.

The report showed inflation pressures generally contained, with a price index for personal spending nudging up 0.1 percent after being flat the prior month.