Durable Goods Orders Decline After Pre-Tariffs Surge

New orders for manufactured durable goods declined by 9.3% in June.

Orders dropped by $32.1 billion to end the month at $311.8 billion, the U.S. Census Bureau said in a Friday (July 25) press release.

June’s drop in orders for durable goods followed a 16.5% increase in May and marked the second decline in three months, according to the release.

Transportation equipment drove the decrease, as that segment was down 22.4% or $32.6 billion, ending the month at $113.0 billion, the release said.

Excluding transportation, new orders increased 0.2%, per the release. Excluding defense, they decreased by9.4%.

Reuters reported Friday that “core capital goods orders,” or non-defense capital goods orders excluding aircraft, dropped by 0.7% in June after rising 2.0% in May. The category is considered to be a proxy for business spending plans, the report said.

June’s drop in core capital goods orders was unexpected, as economists had forecast a 0.2% increase, according to the report.

Economists surveyed by Reuters said that business spending on core capital goods surged in the first quarter before moderating in the second quarter, and they attributed this in part to companies pausing their capital expenditures due to uncertainty around trade policy.

S&P Global said Thursday (July 24) that new orders placed at factories fell in July, marking the first such decline this year. The firm said this was the first deterioration of factory business conditions it had seen since December.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said in a Thursday press release that the deterioration in manufacturing business conditions was “linked to a fading boost from tariff front-running.”

“Business confidence about the year ahead has also deteriorated in both manufacturing and services to one of the lowest levels seen over the past two-and-a-half years,” Williamson said in the release. “Companies cite ongoing concerns over the impact of government policies, notably in terms of both tariffs and cuts to federal spending.”

PYMNTS reported July 1 that while the long-term strategy behind tariff negotiations has been to bring manufacturing back to the United States, there are signs that the sector remains volatile in terms of supply and demand.