US Durable Goods Orders ex Defense MoM: December 2025 Analysis
The latest US Durable Goods Orders ex Defense MoM held steady at 0.10% in December, matching November’s pace. This modest growth contrasts sharply with the volatile swings earlier in 2025, signaling cautious business investment amid mixed macro signals. Monetary tightening, fiscal constraints, and global uncertainties continue to shape the outlook. Market reaction was muted but attentive to inflation and growth cues. Forward scenarios range from moderate expansion to stagnation, hinging on policy and external shocks.
Table of Contents
The US Durable Goods Orders ex Defense for December 2025 registered a 0.10% month-over-month (MoM) increase, unchanged from November’s reading. This data, sourced from the Sigmanomics database, reflects the ongoing cautiousness in capital spending outside defense sectors. Compared to the volatile swings earlier this year—such as the 15.50% surge in June and a steep -9.40% drop in July and August—the current stability suggests a plateau in business investment activity.
Drivers this month
- Steady demand for transportation equipment, offsetting weakness in machinery orders.
- Supply chain normalization reducing backlog pressures.
- Corporate caution amid mixed economic signals and elevated borrowing costs.
Policy pulse
The Federal Reserve’s ongoing restrictive monetary policy, with the federal funds rate near 5.50%, continues to weigh on capital expenditures. Inflation remains above the 2% target, prompting a cautious stance from businesses. Fiscal policy remains tight, with government budgets constrained by recent spending caps and debt ceiling negotiations.
Market lens
Immediate market reaction was muted. The US Dollar Index (DXY) held steady, while 2-year Treasury yields edged up 3 basis points, reflecting persistent inflation concerns. Equity markets showed slight gains in industrial sectors, anticipating steady but unspectacular growth.
Durable goods orders are a key leading indicator of manufacturing health and business investment. The 0.10% MoM increase in December aligns with a subdued but positive trend, contrasting with the 12-month average decline of -1.20% seen over the past year. Core macro indicators such as industrial production and capacity utilization have similarly shown modest gains, supporting a narrative of slow growth.
Monetary Policy & Financial Conditions
The Federal Reserve’s restrictive stance, aimed at taming inflation, has increased borrowing costs. The 2-year Treasury yield now hovers around 4.80%, up from 4.50% three months ago, tightening financial conditions. This environment dampens capital spending, especially for interest-sensitive durable goods.
Fiscal Policy & Government Budget
Federal budget constraints and reduced stimulus measures limit fiscal support for business investment. Defense spending, excluded from this report, remains robust, but non-defense sectors face tighter government funding, impacting infrastructure and equipment purchases.
External Shocks & Geopolitical Risks
Global supply chain disruptions have eased but remain a risk factor. Geopolitical tensions, particularly in Eastern Europe and the South China Sea, add uncertainty to trade and investment decisions. Energy price volatility also influences manufacturing costs and capital allocation.
Drivers this month
- Transportation equipment orders increased by 0.30%, supporting overall growth.
- Machinery orders declined slightly by 0.10%, reflecting ongoing uncertainty.
- Electrical equipment orders were flat, indicating steady but uninspired demand.
Policy pulse
The Federal Reserve’s rate hikes have tempered enthusiasm for new capital projects. The current reading sits below the pre-pandemic average of 0.40% MoM growth, underscoring the impact of tighter monetary policy.
Market lens
Immediate reaction: The US Dollar Index (DXY) remained flat, while the 2-year Treasury yield rose slightly, reflecting cautious optimism. Industrial sector equities gained 0.20% in early trading.
This chart highlights a stabilization phase in durable goods orders after volatile swings earlier in 2025. The trend suggests businesses are cautiously resuming investment but remain constrained by monetary and fiscal headwinds.
Looking ahead, durable goods orders ex defense face a mixed outlook shaped by monetary policy, fiscal constraints, and external risks. The baseline scenario projects modest growth of 0.20% MoM over the next quarter, supported by easing supply chains and steady demand in transportation sectors.
Bullish scenario (20% probability)
- Inflation moderates faster than expected, prompting Fed rate cuts.
- Fiscal stimulus or infrastructure spending increases non-defense orders.
- Geopolitical tensions ease, boosting trade and investment confidence.
Base scenario (60% probability)
- Monetary policy remains restrictive but stable.
- Fiscal policy stays tight with limited new spending.
- Supply chains normalize gradually, supporting steady but slow growth.
Bearish scenario (20% probability)
- Inflation persists, forcing further Fed tightening.
- Geopolitical shocks disrupt supply chains and trade.
- Corporate investment contracts amid recession fears.
Policy pulse
Fed communications will be critical in shaping expectations. Any signal of easing could boost orders, while hawkish tones may suppress investment further.
Market lens
Markets will watch durable goods data closely as a gauge of economic resilience. Industrial equities and interest rate-sensitive sectors may show volatility around future prints.
The December 2025 durable goods orders ex defense reading of 0.10% MoM reflects a cautious business environment. While the data signals stabilization after earlier volatility, growth remains subdued amid tight monetary policy and fiscal restraint. External risks and geopolitical tensions continue to cloud the outlook. Investors and policymakers should monitor upcoming prints for signs of acceleration or contraction in capital spending.
Balancing upside and downside risks, the indicator suggests a slow-growth environment with potential for modest expansion if inflation and geopolitical risks ease. The interplay between Fed policy, fiscal decisions, and global developments will remain key drivers in the near term.
Key Markets Likely to React to Durable Goods Orders ex Defense MoM
Durable goods orders ex defense serve as a barometer for business investment and manufacturing health. Markets that track this indicator closely include industrial equities, interest rate-sensitive bonds, and the US dollar. Below are five tradable symbols historically correlated with durable goods trends, offering insights into market sentiment and economic momentum.
- BA – Boeing’s stock is sensitive to transportation equipment orders, a major durable goods component.
- CAT – Caterpillar reflects machinery demand and capital investment cycles.
- USDCAD – The USD/CAD currency pair reacts to US manufacturing data and commodity-linked trade flows.
- BTCUSD – Bitcoin’s price often reflects risk sentiment shifts tied to economic data.
- GE – General Electric’s diversified industrial exposure makes it a proxy for durable goods trends.
Insight: Durable Goods Orders vs. BA Stock Performance Since 2020
Since 2020, Boeing’s stock (BA) has shown a strong correlation with durable goods orders ex defense. Periods of rising orders coincide with BA’s upward price momentum, reflecting increased aircraft manufacturing demand. Conversely, sharp declines in orders, such as mid-2025’s -9.40% drops, aligned with BA’s stock pullbacks. This relationship underscores the importance of durable goods data as a leading indicator for industrial equities.
FAQs
- What is the significance of Durable Goods Orders ex Defense MoM?
- This indicator measures monthly changes in new orders for long-lasting manufactured goods, excluding defense, signaling business investment trends and manufacturing health.
- How does Durable Goods Orders ex Defense impact monetary policy?
- Strong orders can indicate economic growth, influencing the Federal Reserve’s decisions on interest rates to balance inflation and growth.
- Why do geopolitical risks affect Durable Goods Orders?
- Geopolitical tensions disrupt supply chains and trade, increasing uncertainty and reducing business investment in durable goods.
Final Takeaway
The December 2025 durable goods orders ex defense reading signals a cautious but stable business investment climate. Monitoring upcoming data will be crucial to gauge whether this steadiness evolves into sustained growth or slips into contraction amid persistent macro challenges.
The December 2025 durable goods orders ex defense rose by 0.10% MoM, matching November’s figure and outperforming the 12-month average decline of -1.20%. This steady reading contrasts with the sharp swings seen earlier this year, including a 15.50% jump in June and consecutive -9.40% drops in July and August.
Compared to the previous month, the data signals a stabilization in business investment, with transportation equipment orders leading gains while machinery and electrical equipment remain subdued. The 12-month trend suggests a cautious recovery rather than a robust expansion.