If you were wondering whether businesses are still opening their wallets for new gear, the answer in August was a clear yes. The Commerce Department reported a 1.6% jump in core business equipment orders, the closely watched measure that strips out planes and defense items. July's increase was revised up to 0.6%, and the August print topped all calls in a Bloomberg economist poll.
Total durable goods bookings were essentially flat. Digging into the details, bookings rose in primary metals and in the categories of machinery, computers, and electrical equipment. The weak spot was transportation equipment, with both vehicle and commercial aircraft orders slipping.
Commercial aircraft bookings fell 4.3% in August, and Boeing recorded 15 orders versus 38 in July. On the shipments side, nondefense capital goods that include aircraft fell 1.3%. For GDP accounting, the government relies on shipments rather than orders because orders can be canceled.
The steadier read is core equipment shipments, which leave out planes and defense hardware. That series rose 0.6% after firm gains in the previous two months. Economists lean on this core shipments figure to judge underlying investment because the gap between ordering aircraft or military gear and when those items actually ship can be very long.
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This year's capex story has been powered by spending tied to artificial intelligence, and it is arriving alongside still-resilient consumer demand. Even before Friday's durable goods update, the Atlanta Fed's GDPNow tracker had penciled in nearly a 1 percentage point contribution to third quarter growth.
Manufacturing looks perkier too: S&P Global's flash September factory index hit its strongest level since 2022. That said, companies report that energy and other input costs have climbed amid the wars in the Middle East and Ukraine, which is pushing production expenses higher. As Bloomberg Economics' Eliza Winger put it, "Core orders and shipments suggest equipment spending will make a solid contribution to third-quarter GDP growth. AI-related spending, alongside a more favorable tax environment, continues to sustain investment momentum."
Stronger equipment spending points to businesses still investing for growth, which tends to support jobs and incomes. But pricier energy and inputs can pinch margins and, over time, filter into what consumers pay. Keep an eye on whether this investment streak broadens beyond AI and how rising costs affect the pace.
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