Core capital goods orders rise in July, will it last?
|Summary
Despite a headline decline in July, durable goods orders is the first unambiguously positive development in months for the manufacturing sector. After accounting for pullbacks in aircraft and defense spending, there were broad-based gains in orders.
This isn't just tech-related spend
A headline decline of 2.8% was smaller than the 3.8% drop that was the consensus expectation. A separately reported drop in Boeing orders foreshadowed the second consecutive decline in aircraft orders; the July drop of 32.7% was smaller than the June decline. Defense spending also fell for a second straight month.
The more significant development in this July data is that underlying business demand is holding up better than expected. Motor vehicle and parts orders rose, if only incrementally (up 0.3%), but setting aside the volatile transportation sector, durable goods orders notched a 1.1% gain. That is the best monthly pick-up since September 2024.
Over the past year, we've emphasized how tech spending has been the main—and sometimes only—driver of business spending. That trend continued in today's report, with electrical equipment orders up 2.0% and computer-related orders rising 0.6%. Bookings for fabricated metals (+0.7), primary metals (+1.5%) and machinery (+1.8%) also posted gains in July. While one month doesn't make a trend, especially given tariff uncertainty in recent months, this rebound in old-line manufacturing categories played a key role in today's better than expected report.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.