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Home » Distribution Industry News » U.S. Factory Orders Plunge 4.8% in June as Aircraft Demand Collapses

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  • Published on: August 4, 2025

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  • Picture of Distribution Strategy Group Distribution Strategy Group

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Distribution Industry News

U.S. Factory Orders Plunge 4.8% in June as Aircraft Demand Collapses

Factory orders in the U.S. fell sharply in June, declining 4.8% to $611.7 billion, according to the Commerce Department. The downturn, which followed a revised 8.3% surge in May, was primarily driven by a steep drop in commercial aircraft orders. Despite the monthly decline, total orders remained 3.8% higher than in the same period a year ago.

The drop was concentrated on durable goods, which saw orders fall 9.3% in June. A sizable portion of that decline came from non-defense aircraft orders, which plummeted more than 50%. These large swings, typical of the aerospace sector, often reflect the timing of major contracts and delivery schedules.

More concerning to economists is the weakness in core capital goods—nondefense orders excluding aircraft—which serve as a leading indicator of business investment. These orders declined 0.7% in June, suggesting that companies may be pulling back on spending on equipment and infrastructure.

Many analysts interpret the slowdown as a sign that firms are becoming more cautious with capital investment, in part due to ongoing uncertainty surrounding tariffs and broader trade policy. Rather than committing to new projects, businesses are taking a wait-and-see approach, delaying investment decisions until there is more clarity.

At the same time, shipments of manufactured goods rose 0.5%, indicating that factories are continuing to fulfill existing orders. Backlogs also grew, with unfilled orders increasing 1.0% to $1.47 trillion, the 11th monthly gain in the past year. Inventories edged up by 0.2%, consistent with current trends.

Although the headline decline was driven by transportation equipment, particularly aircraft, some analysts argue that the broader manufacturing landscape is still relatively stable. The overall level of durable goods orders remains solid, and many firms continue to navigate the current environment with resilience.

However, others caution that recent gains in shipments may be inflated by higher prices rather than stronger demand. They note that inflation in capital goods could be masking a slowdown in real production volumes.

With factory orders showing signs of strain and investment indicators softening, the outlook for the manufacturing sector in the second half of the year remains uncertain. Unless trade tensions ease and cost pressures abate, capital spending is likely to remain under pressure.

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