The Latest Durable Goods Report: Positive with a Warning

By SBE Council at 27 March, 2025, 9:55 am

by Raymond J. Keating -

After January data was distorted by transportation issues, the latest durable goods report from the U.S. Census Bureau showed topline growth of 0.9 percent in new orders for manufactured durable goods in February.

And the increase held up well excluding transportation (+0.7 percent) and excluding defense (+0.8 percent). That's positive.

However, when we focus in on capital goods - that is, investment goods, or goods that make other goods - February's new orders were negative. After a decline of 5.2 percent in December and a gain of 10.4 percent in January, new orders for capital goods declined by 1.5 percent in February. But the first two months of 2025 compared to the same period in 2024 saw growth of 7.2 percent.

Concentrating on new orders for nondefense capital goods excluding aircraft, which serves as an indicator for private investment in equipment and software in forthcoming GDP data, they declined by 0.3 percent in February, after growth of 0.9 percent in January and 0.2 percent in December. And the first two months of 2025 was up by 0.4 percent versus the same period last year.

In recent times, while the post-pandemic recovery in new orders for nondefense capital goods excluding aircraft was pretty strong, it basically has stagnated since August 2022. (See the following chart.)

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Source: Federal Reserve Bank of St. Louis, FRED

So, while the February durable goods report was generally positive, there are warning signs on business investment that must be watched.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. He is the author of " The Weekly Economist " book series, and 10 Points from Walt Disney on Entrepreneurship .