Implications:  New orders for durable goods rose a modest 0.3% in June versus the consensus expected 1.8%. The shortfall comes in the midst of a resurgence in capital investment for data centers, which has been a tailwind for economic growth in the first half of the year. Beneath the modest headline, activity continues at a solid pace. Transportation is a notoriously volatile category month to month, so we prefer to focus on orders excluding transportation for a better check on the broader economy. Orders excluding transportation continue to rise, up 0.6% in June and 11.0% in the past year, the largest annual gain in more than four years. The increase in these orders was led by computers & electronic products (+3.1%), primary metals (+1.1%), and electrical equipment (+0.9%). Notably, orders for computers & electronic products are up at a 23.8% annualized pace through the first half of 2026, second only to primary metals, which are up 28.0% over that same period. Orders for fabricated metal products and industrial machinery declined last month.  However, in the past year these categories are up 10.6% and 14.4%, respectively. Arguably the most important number in today’s release is core shipments – a key input for business investment in the calculation of GDP – which rose 1.9% in June and were up at an 11.1% annualized rate in Q2 versus the Q1 average. Business investment has shown strength recently as core shipments have consistently risen for the past year, driven by a more favorable tax environment and the data center buildout. The massive capital spending from the hyperscalers – projected to reach almost $700 billion this year – has been a tailwind for GDP for the past two quarters, and should continue to prop up growth if these companies can sustain the spending pace.

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