- US durable goods orders skyrocketed 16.4% month-over-month in May, nearly double the 8.5% consensus estimate.
- Excluding transportation, orders rose a modest 0.5%, slightly above flat expectations.
- The rebound follows April's 6.3% decline, with volatility tied to shifting tariff policies.
A Volatile Rebound
Preliminary May data from the US Census Bureau shows durable goods orders staging a dramatic recovery, led by transportation equipment. The 16.4% surge marks the latest swing in a turbulent period for manufacturers navigating unpredictable trade policies.
The transportation sector—notoriously volatile due to large aircraft orders—drove much of the gain. This follows April's sharp decline, which partially reversed March's 7.6% increase.
"These wild swings reflect manufacturers racing to front-load orders before tariff deadlines, then pulling back when policies shift," said one industry analyst familiar with the data.
Policy-Driven Turbulence
The Trump administration's "Liberation Day" tariffs—a 10% levy on EU imports—have created a whipsaw effect. Companies rushed orders ahead of expected deadlines, only to see policies delayed or modified. This pattern mirrors volatility seen during the US-China trade war.
Core capital goods orders, a key business investment indicator, remain weak—suggesting corporate caution persists despite the headline rebound. The ISM PMI shows manufacturing in contraction, with 82% of firms citing tariff-related challenges.
What Comes Next?
With no clear resolution to trade policy uncertainty, analysts expect continued order volatility. The Federal Reserve faces added complexity in assessing manufacturing health amid these artificial swings. Markets currently price in a >50% chance of rate cuts later this year.
Correction: An earlier version misstated the April durable goods decline as 6.1%; it was 6.3%. Orders excluding transportation rose 0.2% in April.