US Durable Goods Orders Ex-Transportation Rise 0.4% in July, Slightly Below Forecasts

New orders for U.S. manufactured durable goods excluding transportation increased by 0.4% in July, falling just short of the 0.5% advance economists had anticipated, according to data released today by the Commerce Department. The modest gain suggests that business investment in long-lasting equipment remains resilient but is not accelerating, even as the broader economy shows mixed signals.

What the Latest Durable Goods Report Shows

The ex-transportation figure strips out volatile aircraft and defense orders, offering a clearer view of underlying business demand. July’s 0.4% rise follows a revised 0.3% gain in June, indicating a steady but unspectacular pace of capital spending. While the headline durable goods orders figure—which includes transportation equipment—may have been affected by large commercial aircraft bookings, the ex-transportation measure is closely watched by economists as a more reliable gauge of corporate investment.

Why This Data Matters for the Economy and the Fed

Durable goods orders are a leading indicator for the manufacturing sector, which has faced headwinds from elevated borrowing costs and softer global demand. The slight miss relative to forecasts is unlikely to change the near-term policy outlook, but it reinforces the narrative of a gradually cooling economy. For the Federal Reserve, which has been balancing inflation risks against signs of slowing growth, this report provides another data point suggesting that businesses remain cautious about expanding capacity.

Market and Business Implications

For investors, the ex-transportation figure helps gauge the health of corporate spending, a key driver of productivity and long-term growth. A steady, if unspectacular, rise in orders points to continued—but not exuberant—business confidence. For manufacturers, the data signals that demand for machinery, computers, and electrical equipment remains supportive, though the slight shortfall may temper expectations for a strong rebound in the coming months.

Conclusion

July’s durable goods orders ex-transportation rose 0.4%, marginally below the 0.5% forecast, reflecting a manufacturing sector that is holding steady but not accelerating. The data will be scrutinized by policymakers and market participants as they assess the trajectory of business investment and overall economic momentum.

FAQs

Q1: What are durable goods orders ex-transportation?
Durable goods orders ex-transportation measure new orders for manufactured products expected to last three or more years, excluding volatile transportation items like aircraft and autos. This metric provides a clearer view of underlying business investment trends.

Q2: Why is the ex-transportation figure important?
Because transportation orders are often large and irregular, they can skew the headline number. The ex-transportation figure is considered a more reliable indicator of business capital spending and broader manufacturing health.

Q3: How does this data affect the Federal Reserve’s decisions?
Durable goods orders are part of the economic data the Fed reviews when setting interest rates. A steady but modest rise suggests business investment is not overheating, which may support a patient approach to future rate moves.