American factories received only a modest increase in overall orders during June, but the U.S. Census Bureau’s report released Monday showed businesses sharply increasing spending on computers, electronics and other equipment—a stronger signal for the economy than the headline number suggested.
New orders for manufactured durable goods rose 0.3% to a seasonally adjusted $334.8 billion after falling a revised 4.0% in May. Economists had expected a gain of about 1.6%, making the top-line result a clear miss. Excluding transportation, however, orders advanced 0.6%, while orders excluding defense also increased 0.3%.
Beneath that muted increase, orders for nondefense capital goods excluding aircraft—the measure economists commonly use to track business investment in equipment—climbed 0.9%. May’s gain was also revised sharply higher to 1.9% from the previously reported 1.4%. Core orders were 9.3% above their year-earlier level, not 12.5% as stated in the earlier draft.
The investment figures tell a much stronger story than the durable-goods headline.
Shipments of core capital goods surged 1.9%, their largest monthly increase since December 2021. Those shipments feed directly into the government’s calculation of business equipment spending and suggest corporate investment remained a major source of economic growth during the second quarter.
Overall durable-goods shipments increased 0.7% to $330.7 billion following a 1.1% advance in May. The earlier draft incorrectly described the 0.7% overall increase as the largest gain in four and a half years; that distinction belongs to the 1.9% increase in core capital-goods shipments.
Computers and electronic products led the report, with orders rising 3.1% to $31.1 billion. Shipments in that category increased 2.4% to $34.7 billion, extending a run of nine consecutive monthly gains. Electrical-equipment orders advanced 0.9%, while primary-metals orders rose 1.1%.
That concentration supports the view that artificial-intelligence infrastructure and related technology investment are reaching beyond software companies and into factories producing servers, electrical systems and specialized equipment. Economists cited by Reuters said the AI buildout was helping support both manufacturing and broader economic growth despite tariffs, energy-price uncertainty and the continuing Middle East conflict.
Transportation equipment, usually the most volatile part of the monthly report, failed to provide the expected lift. Orders in that category declined 0.2%, including a 0.6% drop in motor vehicles and parts.
Civilian-aircraft orders increased only 3.7% even though Boeing recorded 121 commercial-aircraft orders during June, up from 27 in May. Roughly 102 were for the lower-priced 737 MAX, leaving the dollar value of the aircraft increase far smaller than the order count alone suggested.
Backlogs provided another sign of sustained demand. Unfilled durable-goods orders rose 0.6% to $1.590 trillion and have increased in 23 of the past 24 months. Transportation-equipment backlogs reached $1.002 trillion, potentially keeping factories busy even if new monthly orders become uneven.
Inventories increased 0.3% to $602 billion and have now risen for nine consecutive months. That is different from saying inventories rose only after four quarters of drawdowns. The four-quarter decline cited by economists referred to broader inventory trends, while the Census durable-goods series itself has been increasing monthly.
For businesses ordering machinery, computers or electrical equipment, the growing backlog means delivery schedules may remain stretched. Strong demand also gives manufacturers more pricing power and could make companies less willing to discount scarce equipment, even as improving inventories make some inputs easier to obtain.
Financing conditions are the next concern. The Federal Reserve began its two-day meeting Tuesday and will announce its rate decision at 2 p.m. Wednesday. Markets were pricing roughly a one-in-three chance of an immediate rate increase, while most economists expected officials to remain on hold and consider beginning a tightening cycle in September.
The manufacturing report gives policymakers evidence on both sides. A weak headline offers support for waiting, but rapidly rising equipment spending, stronger shipments and persistent order backlogs point to an economy that still carries meaningful momentum.
For Main Street operators, the practical message is straightforward: overall factory orders barely moved, but businesses are still spending aggressively where it matters most.
JBizNews Desk | New York
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