• US factory orders rose 1.4% month-over-month in August 2025, reversing two consecutive monthly declines
  • Excluding transportation, orders increased a more modest 0.1%, indicating broad but fragile recovery
  • The rebound marks the strongest expansion in new orders since mid-2022, suggesting the worst of the manufacturing slump may be over

US factory orders snapped back to growth in August, climbing 1.4% after several months of decline, according to data released Tuesday. The rebound was largely driven by a surge in durable goods orders, particularly aircraft and machinery, though the recovery showed signs of broadening beyond transportation sectors.

The modest 0.1% increase in factory orders excluding transportation suggests underlying demand is stabilizing across multiple manufacturing segments. This aligns with recent private surveys showing the S&P Global US Manufacturing PMI jumping to 53.0 in August—its highest reading since May 2022 and a sharp reversal from July's contractionary 49.8.

"The worst appears to be behind us, but the recovery remains uneven," said an economist familiar with the matter, who noted that while new orders are expanding, production hasn't fully caught up. The ISM Production Index actually fell to 47.8 in August, indicating output contracted even as new orders rose.

Manufacturing executives expressed cautious optimism in recent weeks, with several major companies announcing factory investments and expansions. However, rising input costs and ongoing policy uncertainty are tempering enthusiasm. The breadth of contraction has narrowed significantly, with only 69% of manufacturing GDP contracting in August compared to 79% in July.

Certain sectors showed particular strength, with food & beverage and petroleum products returning to growth. Machinery orders, while dipping slightly in preliminary September data, remain at their highest levels since 2022, reflecting continued investment in automation and capital equipment.

Efforts to assess the full impact have been complicated by the ongoing government shutdown, which has disrupted data collection from several key agencies, including the Bureau of Labor Statistics. This has made it harder for manufacturers to gauge the effects of revived import tariffs introduced earlier this year.

Without more stable trade policies and clearer regulatory guidance, some industry groups warn that the recovery could stall. Multiple sources within manufacturing trade associations report mounting concerns about tariffs and inflation, with lengthening supplier delivery times adding to cost pressures.

Most analysts believe the manufacturing sector has turned a corner, but expect growth to remain moderate in the coming months. The current rebound appears driven partly by firms maneuvering around tariff impacts and timing issues rather than a surge in organic end-market demand.

Correction: An earlier version of this article misstated the timing of the manufacturing PMI data. The 53.0 reading was for August, not September.