WASHINGTON – American manufacturing experienced a setback in December as factory orders declined 0.7%, according to data released Monday by the Commerce Department’s Census Bureau. The decrease came primarily from a substantial drop in commercial aircraft bookings, though other sectors showed resilience.
The December decline followed a 2.7% surge in November orders that remained unchanged from previous reports. While economists surveyed by Reuters had predicted a 0.6% decrease, the actual drop was slightly steeper. Despite the monthly decline, orders still showed a healthy 3.7% increase compared to December of the previous year.
The data release was postponed due to last year’s federal government shutdown, which contributed to slower economic growth during the fourth quarter. Manufacturing represents 10.1% of the nation’s economy and continues to face challenges from President Trump’s comprehensive tariff policies, which business executives say have increased expenses for both factories and consumers.
However, certain manufacturing segments have benefited from the accelerating implementation of artificial intelligence technologies. The U.S. Supreme Court struck down Trump’s broad tariff measures on Friday, which were enacted under emergency powers legislation. Trump responded immediately by implementing a 10% worldwide tariff for 150 days to substitute for some emergency duties, then increased the rate to 15% on Saturday.
Wells Fargo economist Shannon Grein commented on the situation: “The Supreme Court ruling doesn’t reset trade policy, and President Trump’s swift actions signal tariffs are here to stay even if they are adjusted in coming months.”
The aviation sector saw dramatic fluctuations, with commercial aircraft orders plummeting 24.8% in December after a remarkable 98.2% jump in November. This sector typically experiences significant volatility. Boeing’s website indicated the company secured 175 aircraft orders in December, though most were for less costly aircraft models, compared to 164 orders received in November.
Several other manufacturing categories demonstrated positive growth. Computer and electronic product orders surged 3.1%, while electrical equipment, appliances, and components saw a 0.3% gain. Machinery orders increased by 0.5%.
Additional sectors showing strength included fabricated metal products and primary metals, both experiencing robust order increases. Motor vehicle bodies, parts, and trailers advanced 2.0%. While business investment beyond AI applications slowed during the fourth quarter, experts anticipate growth acceleration this year due to tax reduction policies.
The Census Bureau also provided updated figures for non-defense capital goods orders excluding aircraft, which economists use to gauge business equipment spending intentions. These orders actually increased 0.8% in December, higher than the initially reported 0.6% gain from last week.
Similarly, shipments of these core capital goods rose 1.0%, exceeding the previously announced 0.9% increase.
