US core capital goods orders, a key indicator of business spending, rose sharply in July, defying broader economic headwinds and pointing to a resilient industrial sector.
Data from the US Census Bureau showed that non-defence core capital goods, excluding aircraft, increased by 1.1% in July. This rebound follows a revised 0.6% fall in June, surpassing analysts’ expectations, a signal that companies are confidently investing in new equipment.
Shipments of these goods also increased 0.7%, the largest monthly gain since April 2023, indicating that these investment plans are quickly translating into real economic activity.
Overall, durable goods orders fell 2.8% to US$302.8bn, weighed down by a steep drop in aircraft demand. Boeing reported just 31 new orders in July, compared with 116 in June.
Economists said the broader rebound in business equipment points to resilience despite trade headwinds, with some companies accelerating purchases ahead of tariff changes.
“Business investment is strong, which makes the economic outlook a little less uncertain, at least for now,” Christopher Rupkey, chief economist at FWDBONDS, told reporters.
For businesses that supply larger corporations, the surge in capital goods orders could create a valuable pipeline of demand.
IT firms: As businesses refresh their systems to support AI and automation, smaller IT firms specialising in cloud migration, cybersecurity and custom software development are well-positioned to win new contracts.
Precision engineering and manufacturing: Manufacturers producing components and parts for industrial machinery, electrical equipment and computer systems are likely to see their order books grow as their larger clients ramp up production.
Logistics and services: The increase in shipments and manufacturing activity will boost demand for specialised logistics providers and other service firms that support the supply chain.
Despite the positive outlook, certain sectors continue to face ongoing challenges. Automotive orders, for instance, remain under pressure from high interest rates and financing costs, with numbers down 1% year-to-date.