Orders for durable goods rose far above expectations in February, climbing 0.9 percent to $289.3 billion, according to the Commerce Department’s report released Wednesday.
Economists had forecast a 1.0 percent decline, but instead, businesses continued to invest heavily in big-ticket items, particularly automobiles, computers, and machinery.
Even excluding transportation, which can be volatile due to large aircraft orders, new orders increased by 0.7 percent, exceeding the forecast of a 0.3 percent gain. The strength of the overall durable goods orders report is further demonstrated by robust gains in key categories.
Auto orders were notably strong, with orders for motor vehicles and parts rising 4.0 percent. Shipments of motor vehicles and parts also surged by 3.9 percent, indicating strong demand from consumers and businesses alike.
The decline of 0.3 percent in core capital goods orders—non-defense capital goods excluding aircraft—appears to be a pullback following the strong 0.9 percent gain in January. This decline also undermines claims that businesses are rushing to buy equipment ahead of potential tariffs. Even with February’s decline, core capital goods orders are still up by 7.3 percent year-to-date, indicating that business investment remains robust.
Core capital goods shipments, a more reliable gauge of business investment since it tracks goods actually delivered rather than just ordered, jumped 0.9 percent. This substantial gain suggests that investment in machinery and equipment remains healthy despite ongoing uncertainties in the broader economic environment.
Orders for computers were particularly robust, increasing by 1.1 percent, while machinery orders rose by 0.2 percent, further contributing to the overall increase.
Importantly, the report provides little evidence to support claims that companies are hoarding goods ahead of tariffs. Total inventories rose by just 0.1 percent to $533.2 billion, suggesting that firms are not stockpiling supplies. Even in categories most likely to be impacted by tariffs, such as primary metals and fabricated metal products, inventories did not show signs of excessive accumulation. Indeed, primary metals inventories declined and fabricated metal products inventories were flat.
Transportation equipment orders rose by 1.5 percent. Orders for non-defense aircraft and parts fell by 5.0 percent in February, after nearly doubling in January.
The overall strength in durable goods orders underscores resilient business demand and suggests companies are continuing to invest despite broader economic concerns. The significant jump in shipments of core capital goods is especially notable, indicating that business investment is contributing positively to economic growth early in the first quarter of 2025.
The durable goods report is the latest piece of so-called “hard data” that indicate actual economic activity continues to expand despite “soft data”—such as consumer and business surveys—indicating anxiety over policy uncertainty and tariffs. Earlier this week, the Commerce Department reported new home sales rose solidly and inventories of new houses for sale increased. Last week, the Federal Reserve said industrial output climbed 0.7 percent in February, including a 0.9 percent rise in manufacturing output.
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