NEW orders for key U.S.-made capital goods increased more than expected in July and growth in shipments held firm, signaling that business investment started the third quarter on a strong note.

The U.S. Commerce Department said Friday orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, rose 1.4 percent last month after an upwardly revised 0.9-percent increase in June.

“That provides further reason to think that overall GDP has continued to expand at a healthy ... pace,” said Andrew Hunter, an economist at Capital Economics.

Business spending on equipment is being supported by the Trump administration’s US$1.5 trillion income tax cut package, which came into effect in January.

But there are worries that trade tensions between the United States and its major trade partners, including China, Canada, Mexico and the European Union, could offset the fiscal stimulus.

Economists polled recentlyhad forecast the so-called core capital goods orders rising 0.4 percent in July after a previously reported 0.2-percent gain in June. Core capital goods orders increased 7.2 percent on a year-on-year basis.

Shipments of core capital goods rose 0.9 percent last month after an upwardly revised 0.9-percent gain in June.

Core capital goods shipments are used to calculate equipment spending in the government’s gross domestic product measurement, so the higher estimate for shipments in June could contribute to an upward revision of economic growth in the second quarter.

Business investment drove about a quarter of U.S. economic growth in the second quarter of the year. (SD-Agencies)