Business investment plans in the US dropped in September for the second straight month, indicating that economic growth halted in the third quarter.
According to data released on Tuesday by the Commerce Department, nondefense capital goods orders fell 0.3% in September after a 1.6% drop in August. Previous reports indicated that core capital goods had slipped 0.8% in August.
Manufacturing accounts for 12% of the U.S.’s economy, but the sector has been negatively affected by a stronger dollar and major spending cuts in the energy sector. As businesses make efforts to reduce an inventory glut and global demand slows, manufacturing continues to suffer.
Additionally, the report indicated weak retail sales, trade, and industrial production. The data suggest that the U.S. economy lost momentum during the third quarter.
Economists predict that gross domestic product expanded at an annual rate of just 1.6%, much lower than the 3.9% pace seen in the second quarter. The advance in third-quarter GDP estimates will be published by the government on Thursday.
Weak business spending and a slowdown in hiring raises doubts that the Federal Reserve will raise interest rates in 2015. The Federal Reserve’s policy-setting committee will convene for a two day meeting on Tuesday.