The U.S. business sector demonstrated signs of slowing down in June when core capital goods orders decreased unexpectedly because companies became uncertain about tariffs and economic policy changes.
The Commerce Department reported that non-defense capital goods orders excluding aircraft—a key gauge of business investment—declined 0.7% last month. The reported 0.7% decrease in June exceeded the expected 0.2% increase which followed the revised 2.0% increase in May.
The shipments data which serves as an indicator for equipment investment showed a 0.4% increase while the previous month’s 0.5% gain was recorded. The inflation-adjusted data indicates a significant decrease in real equipment spending during Q2 after the equipment sector experienced a 23.7% annualized growth in Q1.
The market slowdown stems from businesses purchasing equipment in advance of the steep tariffs that President Trump implemented which initially caused an increase in business activity. The current lack of trade policy clarity has caused numerous companies to delay their capital expenditure plans.
The recent report from S&P Global showed manufacturing experienced its first monthly decline in seven months according to survey data. The Congressional Budget Office predicts that Trump’s comprehensive tax-and-spending bill will increase the national debt by $3.4 trillion while only raising GDP by 0.5% during the next decade.
