US core capital goods orders decline amid policy uncertainty

Orders placed with U.S. factories for business equipment unexpectedly declined in June, suggesting companies remained cautious about capital spending due to trade and government policy uncertainty.

The value of core capital goods orders, a proxy for investment in equipment excluding aircraft and military hardware, dropped 0.7% last month after an upwardly revised 2% gain in May, Commerce Department figures showed Friday.

Bookings for all durable goods – items meant to last at least three years and including orders for commercial aircraft and military equipment – fell 9.3%. Earlier this month, Boeing Co. reported a slowdown in June orders.

Nondefense capital goods shipments including aircraft, which feed directly into the equipment investment portion of the gross domestic product report, fell 0.9%. Rather than orders that can be canceled, the government uses data on shipments as an input to GDP.

The figures wrap a second quarter in which spending on equipment likely slowed sharply from an aircraft-related investment surge at the start of the year that was the biggest since 2020. The government will issue its advance estimate of second-quarter GDP next week.

More generally, business planners were challenged in the first half of the year by President Donald Trump’s frequent changes to tariffs as well as uncertainty surrounding legislation on taxes and spending. While passage earlier this month of Trump’s One Big Beautiful Bill Act helps remove one leg of uncertainty, the fluid trade policy is leaving some businesses’ investment plans in limbo.

“The uncertainty related to trade and tariffs, particularly for companies with global supply chains, continues to pose risks for long-term investment planning,” Eliza Winger, an economist at Bloomberg Economics, said in a note.

Small businesses also reported softening capital expenditures and investment plans during the month as the cost of import duties cut into company profits and raised prices for inputs.

The durables report showed declines in orders of computers and communications equipment.

The government’s report showed core capital goods shipments, a less volatile metric that excludes planes and military hardware, rose 0.4% after a revised 0.5% gain.

Economists like to look at the core shipments figure for a cleaner sign of underlying sales since there are extremely long times between ordering commercial aircraft and military equipment and the actual shipment taking place.

Before the durables report, the Atlanta Fed’s GDPNow forecast anticipated an annualized 0.5 percentage point decline in business equipment outlays for the second quarter after a 23.7% annualized increase in the first three months of the year.

The Commerce Department’s report showed bookings for commercial aircraft, which are volatile from month to month, dropped nearly 52% after a massive increase in May. Boeing said it received 116 orders in June, down from 303 in May.

Recent manufacturing surveys have been mixed. S&P Global’s flash July factory index slid by the most in three years and marked the first contraction since December. A gauge of Philadelphia-area manufacturing jumped much more than expected and reached its highest since February.