What's going on?

Businesses in the US are ramping up their spending, according to new data released on Friday � which should be good news for virtually everyone�

What does this mean?

A key measure of business spending (e.g. on machinery) rose 3.3% in July versus a year ago � faster than economists were expecting. The data measures orders for goods that are meant to last several years and, therefore, is considered a good indication of businesses� long-term investments in their own operations. It was the sixth month out of seven that orders increased � a significant rebound from the weakness experienced in 2015 and early 2016.

Why should I care?

The bigger picture: Business investment should boost productivity within the economy.

One of the biggest concerns over the past few years has been the relatively small improvements in the productivity of the US (and global) economy. The output of workers, per hour worked, is simply not increasing at the rate it has in previous decades. Improved investment by businesses in equipment and technology should help increase productivity (think: better equipment makes for more efficient workers). That, in turn, would support faster economic growth.


For markets: It�s a good sign for the economy � which should help companies make money.

While this is only one data point, it suggests that the US economy is maintaining its relatively strong momentum from the second quarter. The US economy isn�t knocking the lights out, but its consistent growth appears to be continuing. As the economy grows, it becomes easier for companies to increase their revenue and boost profits � which should ultimately support stock prices.