Equipment Demand Reawakens as Core Orders and Shipments Rise, Offsetting a Boeing-Led Headline Slump

America’s capital-expenditure engine coughed back to life in July. Orders for non-defense capital goods excluding aircraft—the clearest read on what companies are buying to expand and modernize—climbed 1.1% after slipping in June, and shipments advanced 0.7%. Those twin gains, the first time in several months that both series moved convincingly in the right direction, hint that business investment is stabilizing after a choppy first half.
The headline numbers on durable goods told a different story, but for a familiar reason. Total orders dropped 2.8% on the month, a fall largely explained by a retreat in commercial aircraft bookings after a hot run earlier in the year. Take the planes out of the frame and the picture brightens: machinery and electrical equipment orders improved, metal-fabrication categories firmed, and the breadth of gains broadened beyond a single industry.
Why does the split matter? Because GDP cares less about order volatility in jets and more about the day-to-day flow of equipment into factories, warehouses, utilities, and data centers. The rise in core shipments—what actually gets delivered and installed—feeds directly into the growth math. Pair that with healthier orders and you have the makings of a steadier capex baseline heading into late summer.
There are still cross-currents to navigate. Tariffs have raised import costs across select inputs, and some of July’s nominal gains could reflect price effects rather than volume alone. Interest costs also remain an active constraint, forcing finance chiefs to stagger projects and demand faster paybacks. Yet the categories that improved in July line up with where businesses say they’re spending: automation to ease labor bottlenecks, electrical gear to harden grids and facilities, and compute-adjacent equipment to support AI-driven workloads.
Markets took the update as mildly growth-supportive, not inflationary. Bond investors lifted long yields a touch, consistent with an economy that’s downshifting without stalling, while equity investors favored pockets that benefit from durable industrial demand. The message from desks was pragmatic: one constructive report won’t force a policy rethink, but a few more like it would make it easier for the economy to coast even as households grow more selective.
The durability test comes next. Core orders are a notoriously bumpy series and often get rewritten in subsequent releases. If August and September confirm July’s pattern—orders holding up, shipments advancing—forecasters will have good reason to pencil in a firmer contribution from equipment to third-quarter GDP. If not, July will read as a welcome but fleeting pause in a year defined by uneven momentum. For now, though, the signal cuts through the noise: outside of aircraft, companies kept buying the tools they need to do their jobs.