Durable goods headline understates strength

September 25, 2026

August durable goods orders held steady after adding a revised 0.9% in July. Away from the headline figure, which was pulled down by lower aircraft orders, the underlying data showed strength. Excluding transportation, durable goods orders rose 0.3% while a measure of capex jumped 1.6%. AI-related orders associated with data center buildouts contributed to the gains.

Transportation orders declined 0.6%, weighed down by a drop in motor vehicle orders and civilian aircraft orders. Orders for motor vehicles and parts slipped 0.6% but consumer demand for new vehicles remains firm. The annualized selling pace for new vehicles is running at 16.5 million, a sign of healthy demand. 

Boeing booked orders of 15 planes in August, down from 30 in July. The UK Farnborough Airshow in July produced the higher bookings. 

Many industries associated with AI data center construction posted robust gains in August. Electrical equipment orders, machinery and primary metals posted increases of more than 1%. Orders for computers and electronics came in flat but for the year they expanded at a double-digit pace of 17.3%, more than double the pace for new orders overall. 

Core orders firmed after an upwardly revised increase for July. Nondefense capital goods excluding aircraft, a proxy for capital spending, jumped 1.6% after rising 0.6% in July. That suggests business confidence remains intact, despite elevated oil prices and rising bond yields.  

Nondefense capital goods shipments excluding aircraft rose 0.6% after increasing 1.4% in July. We project nonresidential fixed investment to grow at a 10.9% annualized pace in the third quarter, following an 8.5% increase in the second quarter. 

S&P Global’s manufacturing Purchasing Managers' Index (PMI) advanced to 57.0 in September; that is the highest reading this year, up from 53.9 in August.