US core capital goods orders and shipments surge in July
New orders for key U.S.-manufactured capital goods rose more than expected in July, signaling a strong start for business spending on equipment in the third quarter.
According to the Commerce Department’s Census Bureau, non-defense capital goods orders excluding aircraft—a closely watched measure of business investment—jumped 1.1% in July following a revised 0.6% decline in June. Economists had predicted a smaller rebound of 0.2%, News.Az reports, citing Reuters.
Shipments of core capital goods also rose 0.7%, building on a 0.4% increase the previous month. Analysts note that part of the increase may reflect higher prices rather than an actual surge in volumes, as tariffs on imported goods continue to push up manufacturing costs.
Orders for durable goods—items designed to last three years or more, from toasters to aircraft—fell 2.8%, mainly due to a decline in commercial aircraft bookings. June saw a sharper 9.4% drop in durable goods orders.
Boeing reported receiving only 31 aircraft orders in July, down from 116 in June. While Boeing has benefited from recent U.S. trade deals, economists caution that some of this year’s aircraft orders may simply reflect pull-forward demand rather than sustained growth.
"Significant orders for planes this year may be more a consequence of pulling forward future orders as opposed to longer-lasting demand," said Veronica Clark, economist at Citigroup. "This could imply a period of particularly weak aircraft orders and production in the coming quarters."
Core capital goods orders have fluctuated this year, surging when businesses rushed to bring in goods ahead of sweeping import duties, then slowing as that front-loading effect eased. Equipment spending had cooled in the second quarter after double-digit growth in the first quarter.
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