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Is Capex Finally Picking Up?

Business spending has been a real drag through the entirety of the recovery.  The so-called “corporate savings glut” has left many wondering if businesses will spend and invest and drive the economic machine like they usually do.  And in the midst of a slowing in government expenditures and anemic consumer spending this is a time when the business sector is much needed.  So this comment from David Rosenberg’s latest really jumped out at me:

“The good news, however, was that the key leading indicator for business spending – core capex goods orders – bounced 1.5% in August.  Furthermore, the three month trend of core capex orders – one of the reliable metrics gauging the US macro pulse – is running at a healthy 8.4% annual rate.”

Rosenberg’s right.  This is hugely important at this point in the cycle when the government deficit is declining and the consumer still doesn’t look 100% healthy.  For now, the trend in business spending looks very healthy.  Let’s hope it keeps up because if it doesn’t it’s likely that the economy won’t hang in there for long.


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