Front-loaded strength, rising risks

April 29, 2026

March durable goods orders firmed 0.8%, its best advance after three straight months of declines. The result was above the market consensus of 0.5%. Excluding transportation, orders jumped 0.9% after rising an upwardly revised 1.2% in February. The report exhibits strength but some, or perhaps much of it, comes from pre-emptive ordering by businesses to hedge against supply chain disruptions due to the US-Iran war.

Transportation orders rose 0.8%, lifted by stronger orders for motor vehicles and parts, rising 1.2%. Flush with higher tax refunds, consumers hit dealerships and purchased vehicles last month. Overall transportation orders were held back by slumping civilian aircraft orders, which fell 21%.

Orders for computers and electronic products soared 3.7%, the largest increase since January 2022, spurred by ongoing AI initiatives and data center investment. On an annual basis, this category rose 15%, the biggest increase since November 2006, which was even before the iPhone was released. For a similar reason, orders for electrical equipment rose 0.7% in March as all the data centers need to be wired internally and connected to the grid.

Defense goods orders increased 18% after rising 2.3% in February due to replenishment needs from the war. This industry is up 46% from a year ago, the highest among all categories. As for the rest, machinery orders rose 0.8%, primary metals up 0.4%, and fabricated metals advanced 0.2%.

Nondefense capital goods orders excluding aircraft, a proxy for capital spending, jumped 3.3%, which follows an upwardly revised 1.6% in February. This is the largest increase since June 2020, near the onset of the pandemic. The full deductibility of depreciation expense has been a tailwind for the manufacturing sector. Now, pre-emptive orders are providing a boost, a source of strength cited in the April PMI survey of manufacturing leaders from S&P Global. The manufacturing PMI improved to 54.0 from 52.3 in March.

Nondefense capital goods shipments excluding aircraft increased 1.2% after rising 1.3% in February. The better figures pose upside risk to our estimate for nonresidential fixed investment in the first quarter, a component of GDP, to be reported on Thursday.