Business spending plans improve despite fiscal cloud

A gauge of planned U.S. business spending increased by the most in five months in October, raising cautious optimism the sharp cutbacks in capital investment during the summer are abating.

Fears of deep reductions in government spending and big tax hikes early next year, a combination known as the fiscal cliff, had caused firms to hunker down.

But orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, rose 1.7 percent last month, the Commerce Department said on Tuesday.

"While the improvement in demand offers some encouragement that the worse of the malaise in capital investment may be behind us, there is little to suggest that this may be the beginning of any meaningful upturn," said Millan Mulraine, a senior economist at TD Securities in New York.

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- Posted: 2012-11-27 15:46:30

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