Core capital goods orders slip in June amid tariff uncertainty

New orders for core capital goods dipped in June as equipment ordering remains volatile amid tariff uncertainty and the market pendulum swings back after a strong May. 

June’s seasonally adjusted value of core capital goods orders, which excludes aircraft and defense equipment, totaled $75.6 billion, down 0.7% month over month following a revised May increase of 2%, according to the Monthly Advance Report on Durable Goods Manufacturers’ Shipments Inventories and Orders, released by the U.S. Census Bureau today. Seasonally adjusted shipments for core capital goods totaled $76 billion in June, up 0.4% MoM. 

Core Capital Goods – Shipments & New Orders

The seasonally adjusted new orders for durable goods in June landed at $311.8 billion in June, down 9.3% MoM after a revised 16.5% spike in May. Meanwhile, seasonally adjusted shipments for durable goods were $302.5 billion, up 0.5% MoM. 

Equipment finance new business volume dropped by 7.4% year over year in June on a non-seasonally adjusted basis, the second largest monthly drop of the year, as part of the slowdown in new orders, according to the Equipment Leasing and Finance Association. Equipment finance new business volume during June suggested a 4.5% decrease in new durable goods orders, yet the market declined by more than double the forecast. 

Tariff-related hesitation persists 

June’s 9.3% drop in durable goods orders was driven largely by a reversal in volatile aircraft demand, according to a July 25 Wells Fargo research note. Even excluding transportation, core capital goods orders and shipments showed weakness, signaling firms remain hesitant to make major investments.  

The slowdown in equipment spending points to a likely soft second-quarter contribution to GDP, with any growth more reflective of a Q1 tariff-driven pull-forward than a sign of underlying economic strength, according to the Wells Fargo note. The impact of tariff-related uncertainty continues to create instability in the equipment and equipment finance market. 

“Businesses are ultimately given little incentive to make large capital expenditures in today’s environment,” according to the note. “August 1 is the next date circled when it comes to potential changes to tariff policy, and the fluid nature of these policies has left many firms in limbo or paralyzed on if and when they should make large equipment outlays.” 

Unfilled orders, total inventories  

Seasonally adjusted unfilled orders for core capital goods reached $300.5 billion in June, down 0.1% MoM. Seasonally adjusted total inventories for core capital goods hit $183.1 billion in June, up 0.3% after a 0.2% revision for May. 

Core Capital Goods – Total Inventories & Unfilled Orders

Seasonally adjusted unfilled orders for durable goods totaled $1.5 trillion in June, up 1% MoM, according to the report. Seasonally adjusted total inventories for durable goods were $588.6 billion in June, up 0.2% for the second consecutive month. 

Despite some resilience reflected in commercial loan growth, weakening capital goods orders and ongoing economic pressures suggest capital investment will soften in the second half of the year, according to the Wells Fargo note. 

“Core capital goods orders slipped at a 1.7% average annualized pace over the past three months, the largest drop in a year,” according to the note. “We’re still bracing for a softening in capital investment in the second half of the year amid increased costs, lower end demand and still-elevated borrowing costs.” 

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