American businesses invested more in April despite rising costs and concerns over demand slowing down. The need for investment in productivity-enhancing equipment has become more pressing as labor shortages and higher costs continue to put pressure on profit margins.

We expect investment to moderate to a more sustained level of growth in the coming months as the impact of higher interest rates make its way through the economy.

Durable goods orders rose 0.4% on the month, following a downward revised 0.6% in March, according to data from the Commerce Department on Wednesday. Gains were driven by strong aircraft orders that were up 4.3% and machinery orders, up 1% from a month ago.

The core orders for capital goods—which exclude aircraft and defense—rose 0.3% in April. This group represents future private investment that feeds into GDP calculation. On a three-month average annualized basis, growth for core capital goods orders remained strong at 6.5%.

The increase was solid even though it was not adjusted for inflation as April’s price index for durable goods only inched up 0.1%, according to the recent consumer price index report.

The current quarter got off to a great start as core capital goods shipments—a proxy for current business investment in the GDP report—increased a sharp 0.8% in April, or 12.1% on a three-month annualized basis.

Durable goods inventories continued to improve, up 0.8% on the month. Inventories of core capital goods also increased by 0.6%.

With production coming back online and factory capacity utilization improved, the number of unfilled orders grew slower in April, up only 0.5% from the recent high of 0.9% in January.