US orders for business equipment increased in July by more than projected, suggesting companies are moving forward on investment plans as some of the trade and tax policy uncertainty gradually diminishes.
The value of core capital goods orders, a proxy for investment in equipment that excludes aircraft and military hardware, increased 1.1% last month after a revised 0.6% decrease in June, Commerce Department figures showed Tuesday.
Bookings for all durable goods — items meant to last at least three years and including orders for commercial aircraft and military equipment — fell 2.8%. Earlier this month, Boeing Co. reported a fewer orders in July than in June.
Non-defense capital goods shipments including aircraft, which feed directly into the equipment investment portion of the gross domestic product report, rose 3.3%. Rather than orders, which can be canceled, the government uses data on shipments as an input to GDP.
Despite the gain, economists expect business investment to be soft for the remainder of the year before picking up in 2026 as companies take advantage of tax provisions after President Donald Trump signed the One Big Beautiful Bill. In the first half of this year, companies were largely cautious about capital spending because of erratic tariff announcements and concerns about demand.
In addition to a Boeing-related surge in business investment in the first quarter, companies ramped up spending on equipment to speed the use of artificial intelligence. AI and similar capital expenditures have the potential of boosting productivity for companies aiming to offset higher costs, including import duties.
The durables report showed orders for electrical equipment, computers, machinery and metals increased last month. Bookings for motor vehicles also picked up.
The government’s report showed core capital goods shipments, a less volatile metric that excludes planes and military hardware, rose 0.7% after an upwardly revised gain in the previous month.
Economists prefer the core equipment shipments figure to gauge underlying capital investment since there are extremely long times between ordering aircraft and military hardware and the actual shipment taking place.
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