U.S. businesses increased spending on key equipment more than expected in August, signaling continued strength in corporate investment as companies expand technology and artificial intelligence infrastructure.

Orders for non-defense capital goods excluding aircraft, a closely watched measure of business equipment investment, rose 1.6% in August, according to Commerce Department data reported by Reuters. Economists had expected an increase of about 0.5%. The July figure was also revised higher.

The increase was supported by stronger demand for computers, electrical equipment, machinery and communications equipment. Orders for computers and related products climbed 1.5% during the month and were up 20.1% from a year earlier, while communications equipment orders increased 35.8% year over year.

The data highlight the continued role of AI infrastructure investment in the U.S. economy. Businesses are spending on computing equipment and other infrastructure needed to support growing artificial intelligence workloads.

However, economists are also watching higher energy costs, inflation and borrowing costs. Rising Treasury yields could eventually make large corporate investments more expensive, while some manufacturing surveys have shown signs that capital-spending plans may be moderating.

For now, the August figures point to continued business investment as U.S. companies expand their technology and equipment capacity.