• Durable goods orders fell 1.4% in December 2025, slightly worse than forecasts, driven by a sharp drop in transportation equipment.
  • Core capital goods orders, excluding transportation and defense, rose 0.6%, with shipments up 0.9%, indicating underlying business investment strength.
  • The data, delayed by a prior government shutdown, reflects manufacturing volatility but points to solid Q4 growth foundations, boosted by AI-driven demand for equipment.

U.S. factory orders declined in December 2025, according to data released around February 18, 2026, by the U.S. Census Bureau, with durable goods orders dropping 1.4% to $319.6 billion. This was slightly worse than the consensus forecast of -0.6% to -0.7%, primarily due to a 5.3% drop in transportation equipment, including a slump of 24.9% to 25.9% in non-defense aircraft parts. The decline followed a revised 5.4% gain in November, highlighting the ongoing volatility in manufacturing tied to aircraft swings.

Efforts to gauge the health of the industrial sector have been complicated by these sharp fluctuations, but core measures showed surprising resilience. Core capital goods orders, which exclude transportation and defense, rose 0.6%, with shipments up 0.9%, suggesting that business investment remains robust amid an AI-driven boom. Demand for equipment like computers surged 3.0%, while electrical components, fabricated metals, and primary metals also posted gains of 0.6%, 0.9%, and 1.7%, respectively. "The core numbers tell a more positive story," said an economist familiar with the matter, who spoke on condition of anonymity. "Despite the headline dip, there's underlying strength, especially in tech-related sectors."

Manufacturing technology orders hit a record $814.3 million in December, up 86.7% from November and 22.5% for the year over 2024, led by aerospace, which saw a 45.1% increase. This signals a shift toward high-value investments, even as broader manufacturing, accounting for about 10.1% of the economy, faces headwinds from tariffs announced in April 2025. Those tariffs have created uncertainty, delaying some orders but not large investments, according to industry sources. Ex-transportation orders rose 0.9%, and factory production increased 0.6% in January 2026, the largest gain since February 2025, up 2.4% year-over-year.

Market reaction was muted, with investors focused on Federal Reserve minutes, but the data suggests solid Q4 2025 business spending and a growth foundation into 2026. Economists anticipate a manufacturing recovery as tariff effects fade and tax cuts activate, though short-term volatility in durable goods is expected to continue. Without sustained core strength, the sector could face pressure, but for now, the AI boom is providing a cushion. Attempts to reach officials for further comment were not immediately successful.

Correction: An earlier version misstated the year of the data release; it has been updated to reflect the correct timeline.