A MIXED reading on the health of U.S. business investment Friday suggested the economy may not have rebounded as strongly in the second quarter as previously believed, but it offered hope for the rest of 2014.

    Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, rebounded 1.4 percent after declining by a downwardly revised 1.2 percent the prior month, the U.S. Commerce Department said.

    However, shipments of these so-called core capital goods fell 1 percent. Core capital goods shipments are used to calculate equipment spending in the government’s gross domestic product measurement.

    It was the third month of decline in shipments, prompting some economists to temper their second-quarter growth estimates.

    “The weak performance in core capital goods shipments during the quarter suggests that this segment of the economy is unlikely to contribute much to economic activity,” said Millan Mulraine, deputy chief economist at TD Securities in New York.

    Morgan Stanley trimmed its second-quarter growth estimate by one-tenth of a percentage point to a 3.2 percent annual rate, while JP Morgan lowered its forecast to 2.6 percent from 2.7 percent.

    The government will release its first snapshot of the second-quarter GDP on Wednesday. The economy contracted at a 2.9 percent rate in the first three months of the year, with business spending on equipment falling at a 2.8 percent rate.

    But the swing back in core capital goods orders last month offered hope for growth in the third quarter. That trend, if sustained, would be a boost to growth.

    Some economists, however, worry that business investment might not pick up much because of the sharp downward revision to May’s core capital goods orders from the previously reported 0.7 percent increase.

    (SD-Agencies)