Corporate profits continue to be high as indicated in the semiannual book closings for the first half of fiscal 2006, and business fixed investment continues to increase.
Although machinery orders, a leading indicator of business fixed investment, declined substantially in the July-September quarter, this does not indicate a change in the underlying trend of business fixed investment, because the decline was partly a reaction to the sharp increase in the previous quarter and is largely attributable to the fall in orders for cellular phones.