II Institutional Intelligence
SMBC · 08/18/2026

081826 CapEx Signals Remain Constructive

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CapEx Signals Remain Constructive The business equipment subcomponent of the Fed’s monthly industrial production report has taken on added importance in recent years due to its strong correlation with real capital expenditures in the GDP accounts, a category that has become increasingly driven by the rapid AI buildout. While July’s 0.8% m/m growth rate, if sustained through August and September, would represent a modest deceleration from recent quarters, shipments of nondefense capital goods, another key CapEx proxy, continue to accelerate notably. We remain optimistic on Q3 capex, forecasting a 10% QoQar gain . Please subscribe to our new research website for access to our content ( here ). Source: Federal Reserve, Census, BEA, Haver, SMBC Nikko -20 -10 0 10 20 30 -20 -10 0 10 20 30 2000 2005 2010 2015 2020 2025 Industrial Prod.: Bus. Equipment (%y/y) Shipments: Nondefense Capital Goods ex Aircraft (%y/y) Real Capex Investment (%, y/y)
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AI analysis
AI-generated from the report above · not a translation and not the institution's wording · verify against the official source
Key arguments
  • Business equipment production grew 0.8% m/m in July, but if sustained, would represent a modest deceleration from recent quarters.
  • Shipments of nondefense capital goods are accelerating notably, providing a positive signal for CapEx.
  • The strong correlation between business equipment production and real capital expenditures underpins the optimistic outlook.
  • AI buildout continues to drive capital expenditures, supporting the constructive view.
Risks
  • A sustained deceleration in business equipment production could weaken the CapEx outlook.
  • Potential external shocks or policy changes could impact capital spending plans.