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The U.S. Commerce Department reported that in October 2025, core capital goods orders and shipments increased, signaling continued strength in manufacturing business investment. While orders for non-defense capital goods excluding aircraft climbed 0.5%, a steep 32.4% plunge in non-defense aircraft orders dampened durable goods figures for the month. These dynamics reflect a manufacturing sector balancing tariff pressures with growth fueled by artificial intelligence-related spending.

Core Capital Goods Orders Show Sustained Momentum

In October, new orders for core capital goods, a vital metric of business equipment investment, rose 0.5% following a revised 1.1% gain in September. This increase surpassed economists’ expectations, who had forecast a 0.4% rise. Additionally, shipments of these capital goods grew 0.7%, after a 1.2% surge the previous month, underscoring strong ongoing demand in manufacturing supply chains.

Non-defense capital goods orders excluding aircraft—a closely watched gauge of business spending—registered the 0.5% gain amid broader economic adjustments. However, tariffs have imposed constraints on manufacturing, which accounts for roughly 10.1% of U.S. GDP. Yet, a boom in artificial intelligence investment is helping offset these headwinds in specific sectors.

Separately, the Commerce Department’s Bureau of Economic Analysis revealed that equipment spending expanded at a solid 5.4% annualized rate in Q3 2025, although this pace moderated from the earlier robust growth recorded during the first half of the year. The U.S. economy itself grew at an annualized 4.3% rate in the third quarter, accelerating from 3.8% in Q2.

Durable Goods Orders Weaken Due to Aircraft Sector Decline

Total durable goods orders—products designed to last three years or longer—declined 2.2% in October after posting a modest 0.7% increase in September. This downturn was largely driven by a dramatic 32.4% drop in non-defense aircraft and parts orders. Boeing’s official data indicated it received only 15 aircraft orders in October, a steep fall from 96 orders a month earlier. This sharp contraction highlights ongoing troubles within the aviation manufacturing niche, which contrasts with more resilient areas of the manufacturing sector.

Manufacturing and Business Investment: Market Implications

The rise in core capital goods orders and shipments suggests that manufacturing investment is holding up despite tariff-related obstacles and sector-specific setbacks like those in aircraft manufacturing. Technology-driven expenditures, particularly those related to artificial intelligence, are playing a crucial role in supporting capital goods demand.

For investors monitoring the manufacturing sector, these figures reveal a nuanced outlook. While durable goods softness points to areas of challenge, overall capital spending within manufacturing remains firm. This divergence emphasizes the importance of selective innovation and investment as drivers of economic momentum late in 2025.

Manufacturing data will continue to be a key barometer for evaluating business confidence and future production growth in the U.S. economy.

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