Some of the largest order gains reported by the Commerce Department in seven months were purchased at higher prices.
It is hard to know whether companies are ordering more widgets to produce the goods and provide the services for a stronger economy in the future, or whether the jump in spending reflects the higher prices from inflation that remains out of control. Christopher Rupkey, chief economist at FWDBONDS in New York, said the economy may be more resilient than we think.
In August, orders for non-defense capital goods excluding aircraft increased by 1.3 percent, the highest increase since January.
The July data was revised higher to show core capital goods orders gaining 0.7 percent, instead of the previously reported 0.3 percent. The data is not adjusted for inflation.
Core capital goods orders could increase by 0.2 percent, according to economists polled by Reuters.
Core capital goods shipments, used to calculate equipment spending in gross domestic product measurement, rose 0.3 percent after increasing by 0.6 percent in July.
For the past two years, business spending on equipment contracted at the highest rate, combined with a slowdown in the pace of inventory accumulation, caused GDP to contract to a 0.6 percent annualized rate last quarter, after declining at 1.6 percent from January to March.
The economy was not in a recession in the first half of the year, with income to growth showing a moderate increase. Goldman Sachs predicts that GDP will rebound at a rate of 1.2 percent in the third quarter.
The U.S. economy is still hanging on, despite the Federal Reserve's aggressive monetary tightening aimed at curbing inflation.
The Federal Reserve Bank raised its policy interest rate by 75 basis points last week, the third straight increase at that level, indicating more major increases this year.
After struggling over the last six sessions, Wall Street stock prices were trading lower, while the dollar was steady against a basket of currencies.
A second report from the Conference Board last week showed that the consumer confidence index rose to 108.0 in September, from 103.6 in August.
The household concerns about inflation have been re-adjusted due to lower gasoline prices.
Consumer inflation forecasts for 12 months have dropped to 6.8 percent, the lowest since January, from 7.0 percent in August.