Durable goods orders rose 0.9% to $289.3 billion, according to a Commerce Department report released Wednesday.
Economists had predicted a 1.0% decline, but instead, companies continued to invest heavily in large ticket items, especially in cars, computers and machines.
Even excluding volatile transport due to large aircraft orders, new orders are up 0.7%, exceeding 0.3% profit forecasts. The strength of the overall product order report is further demonstrated by the robust benefits of key categories.
Automobile orders were particularly strong, with car and parts orders increasing by 4.0%. Automotive and parts shipments also surged by 3.9%, indicating strong demand from consumers and businesses.
Undefensive capital goods, excluding aircraft, are considered to be pullback following a strong 0.9% increase in January. This decline also undermines the claim that businesses are in a hurry to buy equipment before potential tariffs. Even with the February decline, core capital goods orders are still up 7.3% since the start of the year, indicating that business investments remained strong.
The shipment of core capital goods is a more reliable measure of business investment, jumping 0.9%, as it tracks not only orders but actually delivered goods. This substantial benefit suggests that investments in machinery and equipment remain healthy despite the ongoing uncertainty in the broader economic environment.
Computer orders were particularly robust, increasing by 1.1%, while machine orders increased by 0.2%, further contributing to the overall increase.
Importantly, the report provides little evidence to support the claim that businesses stockpile things before tariffs. Total inventory rose just 0.1% to $533.2 billion, suggesting that businesses are not stocking up supplies. Even in categories that are most likely to be affected by tariffs, such as primary metals and manufactured metal products, inventory showed no signs of excessive accumulation. In fact, primary metal inventory was rejected and the inventory of manufactured metal products was flat.
Transportation orders rose 1.5%. After nearly doubled in January, non-defensive aircraft and parts orders fell 5.0% in February.
The overall strength of durable product orders highlights resilient business demand, suggesting that businesses continue to invest despite wider economic concerns. The significant jump in the shipment of core capital goods is particularly noteworthy, indicating that business investments have been actively contributing to economic growth at the beginning of the first quarter of 2025.
The durable product report is the latest in what is called “hard data,” despite the fact that actual economic activity is “soft data” (such as consumers and business research), but symbolizes policy uncertainty and tariff anxiety. Earlier this week, the Commerce Department reported that new home sales had risen steadily, and new home catalogs for sale had increased. Last week, the Federal Reserve said industrial production rose 0.7% in February, including a 0.9% increase in production output.
