By Elsie Kamsiyochi
U.S. business investment showed renewed momentum in February as orders and shipments of key capital goods rose more strongly than expected, offering evidence that equipment spending may be stabilizing even as global tensions and rising energy prices threaten to complicate the outlook.
Fresh data from the Commerce Department on Tuesday revealed that new orders for core capital goods—non-defense equipment excluding aircraft, a closely watched proxy for business investment—climbed 0.6% in February. This increase not only outpaced economists’ forecasts but also helped counterbalance a downwardly revised decline in January, when severe winter weather disrupted business activity and slowed transportation networks.
The improvement in February occurred just weeks before the war between the United States, Israel, and Iran began intensifying. Now entering its second month, the conflict has rattled financial markets, pushed global oil prices higher, and reignited concerns about supply chain disruptions. These pressures come at a delicate moment for U.S. manufacturers, who only recently recovered from the logistical setbacks caused by last year’s government shutdown and lingering post-pandemic bottlenecks.
Economists warn that the geopolitical backdrop could temporarily dampen the rebound. “Firms likely became more cautious in March and perhaps even into April as energy prices spiked,” said Stephen Stanley, chief U.S. economist at Santander U.S. Capital Markets. Still, he expects the surge in oil prices to be short-lived, leading at worst to “a brief pause in investment rather than a reversal of the broader upward trend.”
Broad-Based Gains Across Key Manufacturing Categories
The rise in February orders was supported by growth across several major industries. Purchases of primary and fabricated metals increased, and machinery orders posted a strong 1.5% gain. Computers and electronics were flat overall, with a rise in computer-related products offset by softer demand for communications equipment. Electrical equipment, appliances, and component orders slipped slightly by 0.1%, marking one of the few weak points of the report.
Even more encouraging, shipments of core capital goods—an indicator that feeds directly into GDP calculations—increased 0.9% in February. This followed a stagnant reading in January and suggests that corporate investment is continuing to expand, albeit at a slower pace than earlier in the recovery.
Business spending on equipment has now grown for four consecutive quarters, though the pace moderated in late 2025. Analysts say the country’s ongoing boom in artificial intelligence, cloud computing, and data center development is providing a steady tailwind, helping offset headwinds from tariffs and manufacturing softness in other areas of the economy.
Supply Chain Pressures Re-Emerge
Despite the encouraging figures, some economists remain wary of the impact of the Middle East conflict on manufacturing. An Institute for Supply Management survey last week showed supplier delivery times reaching their highest level in four years, a sign that global shipping routes are once again under strain.
Bradley Saunders, North America economist at Capital Economics, noted that falling shipments of aircraft and parts—down 5.7%—pose potential downside risks to estimates for first-quarter business investment. He cautioned that the sector remains exposed to any further deterioration in global logistics or escalating military tensions.
Durable Goods Tell a Mixed Story
The broader measure of durable goods orders painted a less optimistic picture. Overall orders fell 1.4% in February, driven by a dramatic 28.6% plunge in commercial aircraft orders. Boeing reported only 21 civilian aircraft orders in February, a steep drop from 107 the previous month, highlighting ongoing volatility in the aviation sector.
Still, not all segments struggled. Motor vehicles and parts saw a robust 3.1% surge in orders, while defense aircraft bookings declined by 3.8%. When transportation is excluded, durable goods orders actually rose 0.8%, adding nuance to what otherwise appeared to be a weak headline number.
Shipments of durable goods overall advanced 1.3%, building on a 0.9% increase in January, while inventories and unfilled orders each nudged higher by 0.1%.
Economist Oren Klachkin of Nationwide said businesses remain wary in the face of global instability. “Durable goods spending does not thrive under uncertainty, tighter financial conditions, and supply chain problems,” he said. Yet he emphasized that the AI-driven investment cycle should help keep the sector anchored despite the turbulence. “AI-related demand is unlikely to falter and will continue to support manufacturing and GDP growth,” he added.