U.S. Manufacturing Orders Show Mixed Signals: July Data Beats Expectations Despite Durable Goods Slump

The Commerce Department dropped some interesting numbers on Tuesday—U.S. durable goods orders fell 2.8% in July, but here’s the plot twist: it’s actually better than feared.

Economists were bracing for a 4.0% nosedive. Instead, the decline came in lighter, though it still follows June’s brutal 9.4% drop (revised from 9.3% originally). The culprit? Transportation equipment got hammered again—orders plunged 9.7% in July after a 22.7% crater in June. Aircraft and parts were the worst offender, nosediving 32.7% last month following a 52.7% collapse previously.

But strip out the volatile transport sector, and suddenly the picture clears up: core durable goods orders jumped 1.1% in July, crushing the 0.1% forecast. Non-defense capital goods (the real barometer for business spending) also rebounded strongly—up 1.1% after dropping 0.6% in June. The gains were broad-based, with electrical equipment, machinery, and primary metals all posting solid increases.

The takeaway? Transportation volatility is masking underlying strength in manufacturing. Business equipment investment is on pace to deliver another gain in Q3, though likely smaller than Q2’s performance. Bernard Yaros from Oxford Economics nailed it: “Falling durable goods orders in July reflected a decline in volatile aircraft orders, whereas core capital goods orders rebounded more forcefully than anticipated.”

For traders watching the manufacturing pulse: core demand is holding up. The headline number is a red herring—it’s all about the aircraft noise.