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April 24, 2025

March durable goods orders rose a whopping 9.2% on the strength of a huge jump in Boeing commercial aircraft orders, from a below-average 13 in February to 192 in March. Given Boeing’s huge backlog, such a gain has virtually no implication for near-term production. 

More germane to the near-term outlook, total orders excluding transportation were flat on the month, but rose 3.6% at an annual rate over the past three months. Orders for core capital goods (which exclude defense and aircraft) edged up 0.1%, in line with the consensus expectation.  Core capital goods orders rose 3.4% at an annual rate over the past three months and 1.8% over the year. Those gains are consistent with roughly flat real increases.

Transportation equipment orders surged 27% in March, driven mostly by the jump in commercial aircraft orders. However, orders for vehicles and parts rose a strong 2.3%, following an upwardly revised 5.3% increase in February, which was the largest gain since October 2021. The motor vehicle industry saw a front-running of orders before tariffs on steel and aluminum took effect. According to industry estimates, the price of a new vehicle will see increases in the range of several thousand dollars to as high as $10,000 or more due to tariffs. The upper estimate would represent a 20% increase given that the average transaction price for a new vehicle is about $48,500. Light vehicle sales jumped to 17.7 million units (seasonally adjusted annual rate) in March from 16 million in February. April sales are expected to come in north of 17 million units as well, as consumers rush to beat price increases. 

Orders for nondefense aircraft surged 139% in March, consistent with the jump in orders for Boeing aircraft to 192 planes from 13 in February. Ex-transportation, durable goods orders were flat.

Primary metals orders and fabricated metals orders experienced solid gains, up 0.7% and 0.2%, respectively. Those orders were also boosted by efforts to beat the 25% tariffs on imported metals. The three-month annualized increase for orders for primary metals was a robust 8.8%, while orders for fabricated metal products were up 3.0% on the same basis.

Elsewhere, orders for computers and electronics fell 1.2%, dragged lower by a 2.9% decline in orders for computers and related products. Communication equipment orders rose a solid 3.1%. Machinery orders were little changed (up 0.1%) and have risen just 1.5% at an annual rate over the last three months.

Orders for nondefense capital goods excluding aircraft, a proxy for business capital spending on equipment, rose 0.1%. That follows a 3.1% drop in February, the largest decline in seven months. However, that followed a surge in January, such that core capital goods orders have risen 3.4% at an annual rate over the past three months and 1.8% on the year. 

We will be watching this category closely for signs that business leaders are pulling back on capital spending due to the uncertain tariff environment. The S&P Global manufacturing purchasing managers' index (PMI) flash estimate for the US for April edged up to 50.7; the services index fell to 51.4 from 54.4. The composite index edged down to 51.2 from 53.5.  

Core capital goods shipments rose 0.3% in March after a 0.7% gain in February. They rose 3.0% at an annual rate over the last three months. These data feed into the calculation of business fixed investment in equipment and, combined with a surge in imports of capital goods, are consistent with a solid increase in the first quarter. 

Today’s report feels like the calm before the storm. While some categories were consistent with business efforts to beat tariff-related price increases, the core capital goods orders and shipments numbers overall were nothing out of the ordinary. Anecdotally we are hearing of cancelled or delayed spending plans, hiring freezes and other responses to the jump in uncertainty. We should begin to see this materially affect the hard data in April.