US firms stepped up spending on equipment last quarter, keeping outlays close to their midyear pace. The rise suggests businesses still back growth even as job market morale slips.
Capital expenditures edged up 1.2 percent in July from June, driven by orders for computers and industrial machinery. Companies cited the need to replace aging assets and boost productivity amid mixed economic signals. According to the Equipment Leasing & Finance Foundation, equipment and software investment grew strongly in early 2025, projected to expand 6.3% through the year.
A senior analyst at Capital Insight noted, “Firms see long-term gains from modern gear even if hiring slows.” He added that technology investments can lower costs over time and support future growth.
Labor market confidence dipped to 52 percent in August, down from 57 percent in July. The survey of 1,200 managers showed rising concerns about worker turnover and wage pressures.
Human Resources director Maria Lopez said managers feel uneasy about staffing. She explained, “We are spending more on tools because hiring feels riskier right now.” She forecast modest hiring in the final quarter.
The Federal Reserve’s latest minutes showed officials debating the risks of a cooling labor market. Some members warned that weak confidence could undercut consumer spending and delay rate cuts.
Small businesses boosted equipment spending by 2.5 percent, outpacing larger firms. Owners in the Midwest reported buying new trucks and tools to meet seasonal demand and trim maintenance costs.
Despite higher capital outlays, overall business sentiment slipped for the second month. The National Business Survey index fell to 49, suggesting more firms see headwinds than tailwinds ahead.
Economists at Metro Bank predicted steady growth in equipment investment through year-end. They expect modest gains in manufacturing output as firms replace outdated lines and adopt energy-efficient systems.
Trade group United Manufacturers called on policymakers to offer tax incentives for plant upgrades. Their chairperson argued such moves would sustain spending and help the US compete globally.
Financial markets reacted mildly to the data. The S&P 500 ticked up 0.3 percent, while bond yields edged lower on hopes that equipment investment could bolster productivity and tame inflation.
Companies now await the next Federal Reserve announcement. Analysts say clear guidance on interest rates could either spur more spending or prompt reevaluation of capital plans. Recent data from the U.S. Census Bureau confirms shipments of durable goods increased 1.4 percent in July, reinforcing optimism in equipment spending.
The Equipment Leasing & Finance Foundation projects growth of 6.3% in equipment and software investment for 2025, up from earlier forecasts. The U.S. Census Bureau reported durable goods shipments rose to $307.5 billion in July, marking eight months of continuous growth.
This mix of steady spending and softening labor confidence highlights a complex economic landscape as firms prepare for future challenges and opportunities.
