Durable Goods Orders Fall 9.3 Percent as Aircraft Bookings Plunge

Excluding aircraft, new orders slipped only slightly, suggesting that core business investment remains intact.

A drone view shows Boeing 737 MAX fuselages atop rail cars at a train yard in Seattle on Dec. 5, 2024. Matt Mills McKnight/Reuters

Orders for long-lasting U.S.-manufactured goods fell in June, dragged lower by a sharp drop in commercial aircraft bookings that erased the prior month’s surge, while broader measures of business investment remained relatively stable.

The Department of Commerce said on July 25 that durable goods orders fell by 9.3 percent last month after a revised 16.5 percent jump in May. Excluding defense, orders were down 9.4 percent.

Transportation equipment—the most volatile category—sank 22.4 percent in June, led by a 51.8 percent plunge in nondefense aircraft orders. In May, by contrast, transportation equipment orders soared by 48.3 percent, driven by a 230.8 percent surge in commercial aircraft orders.

The month-to-month swings in the data reflect a flurry of aircraft contracts earlier in the spring, including major deals logged by Boeing, and highlight how lumpy orders in the transportation sector can dominate the headline data. Boeing said it logged 303 aircraft orders in May, including 150 from Qatar Airways during President Donald Trump’s visit to the Gulf state—up from just eight orders the prior month.

The back-to-back swings highlight how large aircraft contracts can dominate headline durable goods data, masking steadier trends elsewhere in manufacturing. Excluding transportation, new orders rose 0.2 percent in June, while shipments of durable goods increased by 0.5 percent—the seventh consecutive monthly gain.

A narrower measure of business investment—nondefense capital goods excluding aircraft—slipped 0.7 percent in June, suggesting corporate equipment spending is cooling only modestly despite trade-policy uncertainty and higher borrowing costs.

“Businesses are still investing, just more selectively,” Thomas Thompson, chief economist at Havas, said in a post on X, commenting on the durable goods numbers. “Shipments are up for the 7th month, signaling resilience beneath the surface.”

Nondefense capital goods excluding aircraft—a closely watched proxy for business investment—slipped 0.7 percent in June, suggesting equipment spending is softening only modestly despite trade-policy uncertainty and elevated borrowing costs.

Chris Zaccarelli, chief investment officer at Northlight Asset Management, said the data eased some concerns about macroeconomic headwinds derailing corporate performance.

“The data this morning reinforces the positive signs coming out of the economy and removes some of the concerns that macro issues will overwhelm positive fundamentals,” he told The Epoch Times in an emailed statement. “As long as trade policy and tariff headwinds are minor, the market can keep moving higher and we are now optimistic for the second half of this year.”

Treasury Secretary Scott Bessent said on July 22 that capital expenditures are up nearly 17 percent in the first half of 2025, describing it as a “major investment wave” and crediting Trump’s “pro-growth, America First agenda” for the jump in business investment.

Richard Farr, chief market strategist at Pivotous Partners, pointed to year-over-year durable goods orders growth of 12.6 percent, arguing that there’s “nothing weak” about the June data except the month-to-month headline decline of 9.3 percent, driven almost entirely by volatile aircraft orders.

The durable goods report comes as other indicators show a split between robust services activity and softening manufacturing. A closely watched survey from S&P Global this week revealed overall U.S. business activity in July expanding at its fastest pace so far this year, with the composite PMI rising to 54.6. The services sector drove the gains, climbing to a seven‑month high, while factory activity slipped back into contraction—the first sub‑50 reading this year.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said the divergence points to an uneven recovery, as households and businesses continue to spend on services, but goods producers are contending with fading boosts related to the front-running of tariffs, along with rising input costs. Nearly two‑thirds of manufacturers surveyed in July linked higher costs to tariffs, feeding expectations of upward pressure on consumer prices in the coming months.

The S&P Global PMI data suggest the U.S. economy may be growing at an annualized pace of roughly 2.3 percent in the third quarter, compared with about 1.3 percent in the second quarter, with official GDP figures for the second quarter due on July 30.