Anabelle Colaco
30 Oct 2026

WASHINGTON, D.C.: Strong equipment spending helped sustain U.S. business investment in the third quarter, with an AI-driven investment boom supporting manufacturing and broader economic growth despite mounting concerns over the cost of building AI infrastructure.

Shipments of core capital goods jumped 1.2 percent in September after rising 0.6 percent in August, the Commerce Department's Census Bureau said. Shipments, which feed into the calculation of business equipment spending in gross domestic product, were 8.8 percent higher than a year earlier.

Orders for non-defense capital goods excluding aircraft, a closely watched measure of business spending plans, increased 0.5 percent after an unrevised 1.6 percent rise in August. Economists had forecast a 0.7 percent increase.

Core capital goods orders were up 10.9 percent from a year earlier.

"There is an investment boom and not everyone in America is participating in it, but the equipment expenditures will continue, and economic growth will likely have a 3 percent handle on it for the foreseeable future," said Christopher Rupkey, chief economist at FWDBONDS.

Economists estimated that business spending on equipment grew at a roughly 20 percent annualized rate in the third quarter. That would mark a third consecutive quarter of double-digit growth.

Overall non-defense capital goods orders accelerated 6.2 percent in September, while shipments increased 1.7 percent.

The figures reinforced expectations for another strong quarter of U.S. economic growth. Economists forecast the economy expanded at an annualized rate of more than 3 percent in the July-September quarter. The government's advance estimate of third-quarter GDP is due Thursday.

AI-related spending has supported manufacturing and the broader economy, offsetting some of the impact of the prolonged Middle East conflict, which has disrupted supply chains and pushed commodity prices, including energy, higher.

But investors have become increasingly concerned about the enormous costs of long-term AI projects and uncertainty over their eventual returns. Technology companies have borrowed heavily over the past year to finance AI spending, raising concerns about future equipment investment.

Economists also expect last year's tax incentives to fade in 2027, while tighter financial conditions and rising inflation from the U.S.-Israeli war with Iran could weigh on spending.

"Survey measures of capex intentions, however, also suggest that core equipment investment will lose momentum ahead, with a slowdown especially likely if the recent surge in borrowing costs is sustained," said Oliver Allen, senior U.S. economist at Pantheon Macroeconomics.

Orders for durable goods, which include products ranging from toasters to aircraft and are intended to last at least three years, rose 1.8 percent in September after edging up 0.1 percent in August. They were eight percent higher than a year earlier.

Transportation equipment orders jumped 4.6 percent, with civilian aircraft orders soaring 28.4 percent. Boeing reported receiving 165 aircraft orders during the month, up from 15 in August.