📉 **U.S. Durable Goods Orders Fell in April—But Not as Bad as Feared**
On Tuesday, the U.S. Commerce Department released a closely watched data point: durable goods orders dropped 6.3% in April, bringing the total to $296.3 billion. This marks a pause after four consecutive months of gains. Still, the decline was less severe than the 7.9% expected by analysts—offering a modest positive surprise.
The sharp drop was driven largely by a slump in transportation equipment. Notably, non-defense aircraft and parts orders plunged by 51.5%, dragging down the overall figure. However, when excluding transportation—a typically volatile category—so-called “core” durable goods orders actually edged up 0.2%. That suggests there’s still underlying strength in U.S. manufacturing, even amid economic uncertainty.
This report is the first glimpse at how companies responded after the U.S. government announced tariff changes in April. Some businesses likely rushed orders in March to get ahead of expected cost increases, making April’s pullback more of a correction than a lasting trend. In fact, March’s previously reported surge was revised down from 9.2% to 7.6%.
Broadly speaking, signs of an economic slowdown are emerging. Real GDP for Q1 2025 turned negative at -0.3%, a steep drop from 2.4% in Q4 2024. In response, the government has already begun rolling back some tariffs in mid-May. Still, average tariff levels remain about 15 percentage points higher than in mid-January. While elevated tariffs may continue to weigh on the economy and inflation, recession fears appear to be easing slightly.
For financial markets, this “better-than-expected” report could inject some short-term optimism. It highlights a degree of resilience in the manufacturing sector—even in the face of policy shifts—and may help ease investor concerns around growth. Still, the April dip breaks a streak of momentum, signaling that near-term trends bear watching, especially with inflation and deficits still in play.
As for the Fed, it’s too early to say if this data will impact its outlook. Markets still broadly expect rates to hold steady throughout 2025, unless the data begins to shift more dramatically.
In sum, while headline orders slipped in April, the slight rise in core orders offers a more encouraging takeaway: U.S. manufacturing fundamentals remain intact. And amid a jittery macro backdrop, that’s a welcome sign.
