US core capital goods orders fall in April

• Core capital goods orders (non-defense excluding aircraft) dropped 1.1% in April, below the expected 0.4% gain, following strong gains in February and March that drove double-digit equipment spending growth in Q1
• Overall durable goods orders surged 7.9% in April, driven by a 165.9% jump in non-defense aircraft orders as Boeing received 136 orders compared to 33 in March
• AI-related spending continues to fuel demand for information processing equipment, helping offset manufacturing pressures from supply chain issues and commodity price increases linked to geopolitical tensions

US Core Capital Goods Orders Fall in April

Key Developments:

U.S. core capital goods orders unexpectedly declined 1.1% in April after a revised 3.9% surge in March, missing economist forecasts of a 0.4% increase. Core capital goods orders—non-defense capital goods excluding aircraft—serve as a critical proxy for business spending plans.

Market Performance:

Overall durable goods orders jumped 7.9% in April following a 1.3% March increase, driven primarily by a 165.9% spike in non-defense aircraft orders. Boeing reported 136 orders in April, predominantly for higher-priced models, compared to just 33 in March.

Sector Details:

• Computer and electronic product orders fell 0.7%
• Gains recorded in electrical equipment, machinery, primary metals, and fabricated metal products
• Core capital goods shipments rose 0.4% in April after a 1.3% March increase

Economic Context:

Despite the April decline, underlying demand remains supported by an AI-driven investment boom, with businesses increasing spending on information processing equipment and related products. This trend helped equipment spending achieve double-digit growth in Q1 and continues supporting the manufacturing sector.

Headwinds:

Manufacturing faces challenges from supply chain disruptions related to ongoing Iran conflict, commodity price increases (oil and aluminum), and lingering import tariff effects. However, AI infrastructure investments are offsetting some of these pressures.

Implications:

The decline follows two months of strong gains, suggesting potential near-term volatility in capital spending. However, the robust AI investment trend and strong aircraft orders indicate continued business confidence in longer-term expansion, particularly in technology and aerospace sectors.