Economists surprised by August data showing strong demand for U.S. capital goods

The U.S. economy started the year amid signs of economic growth. Employers were adding jobs, the manufacturing sector was churning and GDP growth was accelerating. However, economic reports have become increasingly pessimistic over the past four months, as lingering concerns over Europe's sovereign-debt crisis and tepid economic activity have eroded consumer confidence.

The Institute for Supply Management's August report on U.S. manufacturing concluded the sector was growing, but its pace had slowed. Still, economists were cautiously optimistic following reports released Wednesday illustrating increased demand for U.S. capital goods.

Bloomberg reports orders for U.S. capital goods jumped in August by the most in three months. Analysts assert the rise underscores how business investment has helped to spur growth and, at least thus far, has helped to prevent the recurrence of a recession.

Companies increased their orders of computers and communications gear by 1.1 percent, representing the biggest uptick since May. The Commerce Department also said although total demand for durable goods fell by a scant 0.1 percent, it still beat prior forecasts.

Growth in global markets continued to benefit international corporations like Siemens and General Electric, which manufacture industrial equipment and expensive heavy machinery.

The Associated Press reports economists were largely positive in their interpretation of the latest Commerce Department data. Shipments of capital goods climbed 2.8 percent in August, logging their fourth consecutive monthly gain.

Moreover, analysts said the new data was encouraging given growth occurred during a month in which the stock market experienced volatile swings, Europe's debt crisis reached a fever pitch and U.S. officials nearly failed to prevent a government shutdown.

"Business capital spending is rising," Bank of Tokyo-Mitsubishi chief financial economist Christopher Rupkey said. "There is no recession."

Other experts backed such an assertion, affirming as long as businesses continue to invest, it is unlikely the U.S. economy will slip into a so-called double-dip recession.

"Companies are still willing to continue with their investment intentions despite the recent financial-market volatility," affirmed Bank of American economist Neil Dutta. "The risk was always that the recent volatility would prompt a pullback among businesses. At the moment there are no signs of that happening in any meaningful way."

Economists at a number of financial institutions, including JPMorgan Chase and Barclays Capital, raised their growth outlooks for the third quarter as a result of the strong investment data, according to Bloomberg.