US factory orders fall in December on commercial aircraft bookings

• Commercial aircraft orders plunged 24.8% after surging 98.2% in November, with Boeing receiving 175 orders in December but mostly for less expensive models
• AI-related sectors showed strength: computer and electronic product orders jumped 3.1%, while orders for non-defense capital goods excluding aircraft rose a revised 0.8%
• Trump's tariff policies continue to pressure manufacturing, which represents 10.1% of the economy, with a 15% tariff rate imposed after the Supreme Court struck down his emergency tariffs

Summary: US Factory Orders Fall in December on Commercial Aircraft Bookings

U.S. factory orders declined 0.7% in December following a 2.7% increase in November, primarily due to a sharp 24.8% drop in commercial aircraft bookings, the Commerce Department reported Monday. The decline was slightly larger than the 0.6% forecast by economists, though year-over-year orders rose 3.7%.

Boeing received 175 aircraft orders in December, down from 164 in November, but most were less expensive models, contributing to the overall value decline. The commercial aircraft category is noted for extreme volatility.

Despite the headline drop, underlying demand remained robust, particularly in AI-related sectors. Orders for computers and electronic products jumped 3.1%, while electrical equipment and machinery orders gained 0.3% and 0.5%, respectively. Motor vehicle parts orders advanced 2.0%, and fabricated metal products and primary metals showed strong gains.

Core capital goods orders (non-defense capital goods excluding aircraft), a key indicator of business investment plans, were revised upward to 0.8% growth from the initially reported 0.6%. Shipments of core capital goods increased 1.0%, also revised higher from 0.9%.

Manufacturing represents 10.1% of the U.S. economy and faces headwinds from President Trump's tariff policies, which business leaders say increase costs. Following a Supreme Court ruling striking down emergency tariffs, Trump imposed replacement duties at 10%, quickly raising them to 15% for 150 days.

Wells Fargo economist Shannon Grein noted that "tariffs are here to stay even if they are adjusted in coming months." Business investment slowed in Q4 but is expected to accelerate this year due to tax cuts and continued AI adoption.