U.S. durable goods orders in September posted the largest increase in five months, with AI investment supporting corporate equipment demand

Demand in U.S. manufacturing further rebounded in September, with widespread increases in orders for aircraft, computers, machinery, and automobiles. Business investment in equipment also remained strong, providing new support for U.S. economic growth in the third quarter.

Data released by the U.S. Department of Commerce on Tuesday showed that U.S. durable goods orders rose 1.8% month-on-month in September, marking the largest increase in five months. This exceeded the revised previous value of 0.1%, but was slightly lower than market expectations of 1.9%. Durable goods refer to items expected to have a minimum lifespan of at least three years.

Sub-component data revealed that commercial aircraft orders surged 28.4% month-on-month in September, and Boeing received more orders than in the previous month. In addition, orders for computers, machinery, and motor vehicles also rose, indicating that business equipment demand was not driven by aircraft orders alone.

The strong momentum in business investment this year has been primarily fueled by spending related to artificial intelligence. The latest durable goods orders data show that this trend continued in September, providing positive signals for capital expenditure in the U.S. in the third quarter. The U.S. government will release the preliminary third-quarter Gross Domestic Product (GDP) data on Thursday, with business equipment investment set to be an important component in evaluating economic growth.

Looking at shipment data, which better reflects the actual realization of investment, the volume of capital goods shipments excluding defense items (including aircraft) grew 1.7% month-on-month in September. This indicator serves as an important reference for equipment investment in GDP calculation, since orders may be canceled while shipments are closer to actual deliveries.

The GDPNow model from the Atlanta Federal Reserve previously forecast that business equipment spending would contribute 1 percentage point to U.S. economic growth in the third quarter.

Meanwhile, excluding aircraft and military hardware, core capital goods shipments rose 1.2% month-on-month, continuing the previously strong growth trend. Economists prefer to use this indicator to measure underlying capital investment trends, as orders for aircraft and military hardware often have long lead times between ordering and actual delivery, and changes in orders may not promptly reflect current investment activity.

Overall, September's durable goods orders and capital goods shipment data both indicate that U.S. business equipment demand remains resilient. Continued investment in artificial intelligence is also supporting manufacturing and capital expenditure. The market will next focus on Thursday's release of preliminary U.S. third-quarter GDP to further assess the actual contribution of this investment momentum to economic growth.