US core capital goods orders point to robust growth

By the Editorial Team · Sunday, September 27, 2026

New orders for U.S.-manufactured core capital goods increased 1.6 percent in August, exceeding expectations and indicating continued strong business investment driven largely by AI infrastructure development. However, rising economic uncertainties and early signs of slowing manufacturing spending suggest this rapid growth may not be sustained in the near term.

New orders for key U.S.-manufactured capital goods rose more than expected in August, while data for July was revised upward, indicating continued strong growth in business investment amid an ongoing expansion in artificial intelligence (AI) infrastructure. The Commerce Department reported the increase on Friday, highlighting sustained momentum in equipment spending that supports economic growth.

Non-defense capital goods orders excluding aircraft, a closely watched indicator of business spending, climbed 1.6 percent in August following a revised 0.6 percent gain in July. This surpassed economists’ forecasts, which had anticipated a 0.5 percent increase after an initially reported flat reading for July. Year-over-year, core capital goods orders surged 10.6 percent, underscoring robust demand.

The rise was driven in part by a 1.1 percent recovery in orders for electrical equipment, appliances, and components. While overall demand for computers and electronic products remained flat, some segments within that category showed notable strength. Orders for computers and related products jumped 1.5 percent in August and were up 20.1 percent compared to the previous year. Communications equipment orders also increased modestly by 0.3 percent last month but posted a sharp 35.8 percent annual gain. Machinery and primary metals orders grew 1.1 percent and 1.2 percent, respectively. Conversely, orders for fabricated metal products declined 1.3 percent.

Analysts attribute much of the sustained investment growth to AI-related infrastructure buildout as well as favorable tax incentives from legislation passed last year. Some companies have also accelerated purchases to mitigate the rising costs associated with import tariffs and geopolitical tensions, particularly linked to the Middle East conflict.

Despite the upbeat data, concerns about the durability of AI-driven demand persist. Several industry leaders have called for regulatory measures on AI technology, highlighting potential risks. Additionally, rising oil prices, higher interest rates, and elevated long-term U.S. Treasury yields related to the ongoing Middle East situation may weigh on sectors of manufacturing not tied to AI.

“The AI investment boom is real and it is carrying the economy along with it,” said Christopher Rupkey, chief economist at FWDBONDS. However, he warned that “eventually the music will stop,” reflecting uncertainty about the sustainability of current growth levels.

Supporting this caution, some economists note early signs that capital spending may be moderating. Regional Federal Reserve manufacturing surveys have shown a slowdown in planned capital expenditures. “We see some early signs that this slowing growth may be occurring in recent manufacturing sector data,” said Veronica Clark, an economist at Citigroup. She added that slower growth in new investment could be expected when spending and activity are already at elevated levels.

Overall, the data suggest that while the AI-driven surge in business investment remains strong for now, a slowing pace of growth may be on the horizon amid broader economic headwinds.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.