• Headline durable goods orders fell 2.8% month-over-month in July, a less severe drop than the 4.0% decline forecast by economists.
  • Stripping out volatile transportation components, core orders rose a robust 1.1%, significantly beating the +0.2% estimate and pointing to underlying manufacturing resilience.
  • The data suggests business investment remains on solid footing despite recent volatility driven by large-ticket transportation items and shifting trade policies.

New orders for long-lasting US manufactured goods contracted for the second consecutive month in July, though the decline was notably softer than anticipated, according to preliminary data. The headline figure’s 2.8% drop follows a steep 9.3% plunge in June, which was largely attributed to a sharp pullback in aircraft orders after a one-off surge in May.

The more telling story, however, lies beneath the surface. Orders excluding transportation—a key gauge of underlying business investment—climbed 1.1% last month, handily surpassing expectations. This suggests demand for core capital goods remains healthy, driven by ongoing investment in technology and equipment. “The ex-transportation number is what you watch for the real pulse of manufacturing, and it’s beating strongly,” said one economist who reviewed the data.

Recent months have seen extreme volatility in the headline number, largely due to trade policy uncertainty. Firms appear to have front-loaded significant purchases, particularly in the aerospace sector, ahead of tariff changes that took effect in May and June, creating a boom-and-bust pattern in the data. The underlying trend, however, has been one of moderate growth, supported by what analysts describe as a generally solid consumer base with rising real incomes and stable business finances.

Efforts to reach the Commerce Department for additional comment on the data were not immediately successful. The report comes amid a volatile economic landscape, with recent policy announcements contributing to currency and market movements. While the data indicates resilience, some business surveys have pointed to waning confidence, with S&P Global recently noting some of the lowest business sentiment levels in over two years. For now, the core numbers suggest the manufacturing sector is navigating the uncertainty better than some had feared.