Orders of Business Equipment Unexpectedly Stall

Orders placed with U.S. factories for business equipment unexpectedly stalled in July after four straight monthly gains, marking a pause in an ongoing buildup of capital investment.

Bookings for durable goods—items meant to last at least three years—decreased 0.1 percent from the prior month, reflecting a pullback in orders for commercial aircraft.

The value of core capital goods orders—which excludes aircraft and military hardware, and which is seen as a barometer of business equipment investment—was little changed after an upwardly revised 1 percent increase a month earlier, Commerce Department figures showed Wednesday.

The median estimate in a Bloomberg survey of economists called for a 0.5 percent increase in core capital goods orders and a 0.3 percent drop in total durables.

Equipment spending has been a significant tailwind for growth since mid-2020. A snapback in consumer spending paired with still-lean inventories has bolstered demand for factory goods, though ongoing capacity constraints related to both materials and labor have hampered the pace of production.

Core capital goods shipments, a figure that will be used to calculate investment in the government’s third-quarter GDP report, rose a larger-than-forecast 1 percent after a 0.6 percent gain.

Bookings of commercial aircraft and parts fell almost 49 percent, following a 4.7 percent gain a month earlier and a 50.7 percent surge in May. Boeing Co. earlier reported 31 orders in July, a sharp deceleration from the 219 orders seen a month earlier. The government’s data aren’t always directly comparable on a month-to-month basis.

Outside of the volatile commercial aircraft category, bookings were mixed. Orders for communications equipment and electrical equipment decreased, while demand picked up for motor vehicles, metals, machinery, and computers.

Unfilled orders for manufactured durable goods and inventories both rose for a sixth month, highlighting the persistent bottlenecks and long lead times faced by manufacturers. The value of unfilled orders for motor vehicles increased to a fresh record.

Other U.S. manufacturing data out in recent weeks have been largely disappointing relative to expectations. The Institute for Supply Management’s gauge of factory activity eased for a second month in July, while a separate report from IHS Markit showed manufacturing activity reached a four-month low in August as output, factory employment, and orders cooled.

—With assistance from Kristy Scheuble & Olivia Rockeman.

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