Durable Goods Orders Rise 1.1% in July as Core Capex Stalls at 0.2%

New orders for manufactured durable goods rose 1.1 percent in July to $339.3 billion, a $3.6 billion gain that followed a 0.5 percent increase in June and marked the fourth advance in five months. The headline flatters the underlying picture. Strip out transportation equipment and new orders rose just 0.4 percent; the core capital goods proxy that feeds the equipment investment line of the national accounts managed only 0.2 percent. Judged against its own history of month-over-month changes, July's headline gain sits well inside the series' normal range of monthly variation.

Transportation Carried the Headline

Transportation equipment orders rose $2.6 billion, or 2.3 percent, to $116.2 billion, reversing two consecutive monthly declines and supplying most of the headline advance. The swing factor inside transportation was the usual one. Nondefense aircraft and parts orders jumped 12.7 percent to $19.8 billion after falling 2.9 percent in June and 51.1 percent in May, the kind of lumpy, contract-driven movement that regularly swings the headline without signalling anything about underlying business conditions. Motor vehicles and parts, the steadier half of the category, rose 0.9 percent to $73.9 billion.

Defense sits in a separate category and pulled the other way. Defense capital goods orders fell 1.5 percent to $23.0 billion, which is why new orders excluding defense rose 1.3 percent, ahead of the headline, while new orders excluding transportation rose only 0.4 percent. The two exclusions bracket the release: transportation added to July, defense subtracted from it. Within defense the composition was mixed, as defense aircraft and parts orders rose 4.9 percent even while the wider defense capital goods aggregate fell.

The volatility here is structural rather than informative. The same series jumped 8.5 percent in April and fell 4.0 percent in May before settling into gains of 0.5 percent in June and 1.1 percent in July.

Core Capex Orders Stall

Nondefense capital goods orders excluding aircraft, the capex proxy that GDP forecasters track, rose just 0.2 percent to $85.9 billion. The three-month sequence is more informative than any single level: 1.9 percent in May, 1.7 percent in June, 0.2 percent in July. Momentum that looked firm through early summer went flat.

The wider capital goods aggregates looked healthier, but only because aircraft sits inside them.

• Nondefense capital goods orders: $99.1 billion, up 2.0 percent, or $1.9 billion
• Core orders excluding aircraft: $85.9 billion, up 0.2 percent
• Defense capital goods orders: $23.0 billion, down 1.5 percent, or $0.4 billion
• Nondefense capital goods shipments: $97.0 billion, up 1.6 percent, or $1.5 billion
• Core shipments excluding aircraft: $84.5 billion, up 1.4 percent

The last line matters most for the current quarter. Shipments, not orders, are what the national accounts convert into equipment investment, and core capex shipments rose 1.4 percent in July on top of a 2.4 percent June gain. Orders are the leading edge and shipments are the realized revenue. In July the two moved in opposite directions.

The Business Investment Signal

One soft month is not a trend, and the year-to-date run rate is considerably stronger than July alone. Measured without seasonal adjustment, cumulative 2026 orders against the same period of 2025 look like this.

• Core capital goods excluding aircraft: up 10.0 percent
• Machinery: up 12.4 percent
• Computers and electronic products: up 14.3 percent
• Primary metals: up 14.2 percent
• Nondefense aircraft and parts: down 21.8 percent
• Defense capital goods: up 43.3 percent
• Total durable goods: up 7.6 percent

The composition carries the message. Core capex demand has been genuinely strong all year, and the categories that reflect domestic capacity building, machinery and primary metals and computers and electronics, are running double-digit gains. What has held total nondefense capital goods orders to a 1.1 percent year-to-date gain is the 21.8 percent decline in nondefense aircraft orders, a backlog-timing artifact rather than a statement about corporate willingness to invest. Defense orders, up 43.3 percent year to date, are a government demand impulse that should be read separately from private capacity expansion.

Manufacturing Sector Health

The flow and backlog measures were firmer than the order book.

• Shipments: $334.7 billion, up 1.0 percent, or $3.2 billion, a tenth advance in eleven months
• Unfilled orders: $1.6 trillion, up 0.6 percent, or $9.6 billion
• Inventories: $604.4 billion, up 0.4 percent, or $2.2 billion, a tenth consecutive monthly increase

The backlog detail is the encouraging part. Transportation equipment unfilled orders rose 0.5 percent to $1.0 trillion, but the backlog excluding transportation grew faster, up 0.8 percent to $593.5 billion. A production pipeline that keeps filling outside aircraft is the better read on sustained demand, and unfilled orders have now risen in twenty-four of the last twenty-five months. Inventory accumulation stayed measured at 0.4 percent, with primary metals up 1.5 percent to $51.9 billion.

Revisions were small. June durable goods orders now stand at $335.7 billion, a 0.5 percent gain, and across all manufacturing industries June new orders were revised up to $657.7 billion from $656.5 billion, with shipments revised to $653.5 billion from $652.1 billion.

Two methodology points bear on how the print should be read. The Census Bureau has said that revised historical data and the seasonal adjustment models for this survey will remain unchanged for the remainder of 2026 because of schedule and resource constraints, so seasonal factors will not be re-estimated as the year runs on. New and unfilled orders also exclude semiconductor manufacturing altogether, which matters when reading the computers and electronic products line, where orders fell 1.1 percent and shipments fell 1.2 percent in July.

GDP Implications

Equipment investment is a small share of output but an outsized signal for the business cycle, and this report points in two directions at once. The shipments side is consistent with a positive equipment contribution to third-quarter GDP: core capex shipments rose 1.4 percent in July after 2.4 percent in June, and total durable goods shipments have now risen in ten of the last eleven months. The orders side is consistent with that contribution fading, because a 0.2 percent core reading after 1.7 percent and 1.9 percent is the profile of demand levelling off rather than collapsing.

On a seasonally adjusted basis, total durable goods orders sit 12 percent above their July 2025 level, so the level of demand remains high even where monthly momentum has stalled. The read that fits both facts is a manufacturing sector still working through a $1.6 trillion backlog while new commitments moderate.

The next read arrives in two stages. The full report on September 2 adds nondurable goods and revised July detail, which will show whether the advance estimate of a 0.2 percent core capex gain survives the larger sample. The August advance report follows on September 25. In both, the number to watch is nondefense capital goods orders excluding aircraft. A rebound toward June's 1.7 percent pace would mark July as aircraft-driven noise in an order book that is still expanding; a second flat or negative month would establish that the 10.0 percent year-to-date pace is a rear-view figure and that equipment investment is losing momentum through the third quarter.