Loans and leases for business equipment increased 10.7% last month compared with May 2011, an ELFA survey found. Volume rose 1.6% from April to May. "Although overall spending has steadily increased since the financial crisis, pockets of the market are still tenuous as some customers are canceling or postponing [capital-expenditure] purchases amidst softer commodity prices or weaker demand from abroad," said Maureen Carr, managing director of corporate asset finance at CapitalSource.
Small businesses are suffering disproportionately from rising gasoline prices because they don't have the market power enjoyed by bigger companies to pass along higher costs to customers, experts said. In a survey by the National Federation of Independent Business, owners of small businesses said fuel costs are their top problem.
Federal Reserve Chairman Ben Bernanke said that although Europe is taking action to address its financial problems and the threat to the U.S. has lessened, some concerns remain. In testimony before the House Committee on Oversight and Government Reform, Bernanke said U.S. money markets could be "structurally vulnerable." He said recent stress tests showed that a majority of major U.S. banks would have enough capital to survive a severe recession, and he said it's unlikely that the U.S. will lose money from supporting the European Central Bank.
Caterpillar is expanding a manufacturing facility in Xuzhou, China, increasing production capacity for hydraulic excavators by 80% by 2016. The company also plans to produce wheeled excavators at the factory starting in 2014. Caterpillar has 17 plants in China and an additional nine under construction.
The Federal Reserve's Beige Book survey of the economy shows that economic recovery is slow and fragile. The biggest indications of improvement are seen in residential real estate sales, increasing consumer prices and rising manufacturing orders. But retail sales and commercial real estate values remain weak.