September orders built on August strength

November 26, 2025

September durable goods orders rose 0.5%, in line with expectations, after increasing a much stronger 3% in August. Excluding transportation, durable goods orders increased 0.6% in September, following a 0.5% rise in August. Two measures of core goods orders, both shipments and orders, finished the third quarter on a strong note, each rising 0.9%. That suggests business capital spending is carrying positive momentum into the current quarter.

Orders for electrical equipment, appliances and components jumped 1.5%, scoring the second largest increase this year. Electricity demand stemming from AI data centers and connectivity to the energy grid drove demand. The federal government's Energy Information Administration projects electricity consumption to increase 1.7% over the period 2020-2026, a significant acceleration from just 0.1% growth in the prior period of 2005-2020.

Orders for primary metals increased by 1.5%, as producers shifted to domestic over imports. Fabricated metals orders and computers and electronic products orders each added 0.5%. Sadly, prices have moved up with tariff even on domestically made metals. That is common during high tariff regimes.

Orders for motor vehicles and parts increased 0.4%, the softest increase since a decline back in April. The expiration of federal tax credits for electric vehicles at the end of September will likely mean a tougher selling environment. Affordability is another major hurdle, as vehicle loan rates rose after the first rate cut by the Fed; they remain elevated as do prices. The vehicle sector has absorbed nearly all of the margin compression due to tariffs, which showed up in the PPI data released yesterday. Margins in the vehicle sector contracted by a double-digit rate in two of the three months from July to September. Vehicle sales plummeted in October, so the sector will likely weaken further. Worse yet, the consumer confidence figures for November slumped to their lowest level since April; plans to buy big ticket vehicles, appliances and furniture plummeted.

The one decline in the report occurred in civilian aircraft orders, which fell 6.1% after jumping 20.2% in the prior month. This measure is often noisy and volatile on a month-to-month basis. This is due to timing differences between signed contracts reported by Boeing, which is how the manufacturer reports new orders, and the Census, which tracks production schedules. Aircraft orders take years to fulfill and the aircraft industry is ramping up over a series of disruptions, including a major strike in late 2024.

Core orders, which represent a proxy for capital spending and reflect business sentiment, rose solidly in September. Nondefense capital goods shipments excluding aircraft rose 0.9%, which is consistent with S&P Global's manufacturing purchasing managers' index (PMI) reading of 52.0 in September. The Census Bureau data contributes to the calculation of business fixed investment in the GDP report and suggests a meaningful annualized increase of more than 4% for the third quarter. Again, this is mostly driven by AI-related investments.

Nondefense capital goods orders excluding aircraft rose 0.9% in September, after showing an upward revision of 0.9% for August. That suggests the investment momentum continued into the end of the third and start of the fourth quarters. Changes in the tax and spending package passed in July allowed for 100% depreciation of new investments. That is helping to ameliorate the effects of tariffs, although the bulk of those gains will accrue to the tech sector and spending on data centers. The tech sector has received waivers on tariffs to build up its computing capacity as well.

The preliminary November result for the PMI was reported at 51.9 and 52.5 in October, above the third quarter average of 51.6. The improved results suggest that business fixed investment growth in the fourth quarter will remain robust, fueled by ongoing gains in AI infrastructure investments. The backlogs for both data centers and energy infrastructure projects are creating a tailwind for business investment even as consumers pull back, notably on big-ticket purchases.