We have no direct readings on capital spending in August, but the limited indicators currently in hand – such as the Institute for Supply Management’s survey of purchasing managers – have held up reasonably well and remain at levels consistent with modest growth in manufacturing production and business investment.
Of course, all this could change noticeably if many firms were to face significantly tighter credit conditions or if business sentiment were to soften appreciably. Regarding international developments, the recent deterioration in financial market conditions has had effects around the world, but the economies of our major trading partners appear set to continue their expansion.