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Factory Orders Dip, But Business Spending Holds Strong
7 Jan
Summary
- New factory orders decreased by 1.3% in October, impacted by aircraft sector.
- Business spending on equipment showed solid growth early in the fourth quarter.
- Tariffs continue to constrain manufacturing, impacting recent surveys.
New orders for U.S. factory goods experienced a 1.3% decrease in October, a decline primarily influenced by significant drops within the volatile aircraft sector. This marks a shift from the previous month's modest gain. Despite this overall dip, early fourth-quarter data suggests robust business investment in equipment, signaling underlying strength in certain industrial segments.
The report, which was delayed due to a government shutdown, also highlighted persistent challenges for the manufacturing sector. President Donald Trump's sweeping tariffs continue to act as a constraint, as evidenced by recent surveys indicating a slump in manufacturing activity and ongoing concerns from industry respondents.
Conversely, surging investment in artificial intelligence is providing a notable boost to specific areas of the industry. Measures of business spending plans on equipment, specifically non-defense capital goods excluding aircraft, saw a 0.5% increase in October, underscoring a positive trend in capital expenditures.
