Orders for U.S. Business Equipment Rising Fast

Bookings for all durable goods—items meant to last at least three years—dropped 1.1 percent on fewer orders for commercial aircraft and a decline in defense spending. Excluding transportation equipment, orders decreased 0.1 percent.

The advance in orders may be just the beginning as companies are more comfortable making long-term investments now that the election has passed. Demand for big-ticket items may also be getting a boost from buyers looking to get ahead of higher prices that may result from new tariffs when Donald Trump takes office. The report showed strength in orders for machinery, computers, and primary metals.

Another sign of optimism came earlier this month when a gauge of new orders moved into expansion territory for the first time in eight months, according to the Institute for Supply Management’s November manufacturing survey.

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What Bloomberg Economists Say…

“While the month’s data likely didn’t yet reflect the surge in sentiment after the November 5 presidential election, there’s a good chance capex [capital expenditures] will gain ahead. Businesses are more optimistic on expectations for the economy to improve under the incoming Trump administration.”

—Eliza Winger

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However, high borrowing costs—which have kept the sector in a downturn for the past two years—may stay elevated for some time. Last week, updated projections from the Federal Reserve showed fewer interest rate cuts in 2025, with policymakers firmly set on quashing inflation.

Core capital goods shipments, a figure that is used to help calculate equipment investment in the government’s gross domestic product (GDP) report, gained 0.5 percent after rising 0.4 percent in October. Before the report, the Atlanta Fed’s GDPNow forecast penciled in a 2 percent decline in business equipment spending for the fourth quarter. Separate data out last week showed the U.S. economy expanded at a faster pace in the third quarter than previously estimated, due in part to stronger equipment spending.

Monday’s report—produced by the Census Bureau—showed the level of bookings for commercial aircraft, which are volatile from month to month, fell 7 percent after surging in the prior month. Boeing Co. reported 49 orders in November, down from 63 in October. Despite the drop, the company’s commercial aircraft deliveries are showing signs of stabilizing after one of the most tumultuous periods in the company’s history. While often helpful to compare the two, aircraft orders are volatile and the government data doesn’t always correlate with the planemaker’s monthly figures.

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