US factory orders rose solidly in February 2025, marking a second consecutive monthly gain and signaling renewed resilience in the manufacturing sector—even amid rising tariff-related uncertainty.

US-manufactured goods orders climbed 0.6% month-on-month, reaching approximately $594.0 billion, according to the U.S. Census Bureau—surpassing analysts’ expectations of a 0.5% gain. This followed an upwardly revised 1.8% increase in January.

Key Subcategory Trends

• Durable goods orders were up 1.0% in February, improving on January’s 0.9% gain.
• Transportation equipment orders rose 1.5%, bolstered by rebounds in certain segments, including a 9.3% rise in defense aircraft orders—despite a 5.0% decline in commercial aircraft orders.
• Machinery orders grew by 0.6%, while electrical equipment, appliances and components orders increased around 1.9–2.0%.
• Core capital goods orders, excluding aircraft and seen as a proxy for business investment, dipped marginally by around –0.2% to –0.3%.

Additional metrics revealed that shipments rose by approximately 0.7%, unfilled orders increased by 0.1%, and inventories ticked up by 0.1%—all consistent with a sector gaining momentum.

Broader Manufacturing Context

The ISM Manufacturing PMI edged lower to 50.3% in February, down from 50.9% in January—yet still indicating expansion for the second straight month following a 26-month contraction. Supply costs surged, with the prices-paid index climbing to a 33-month high of 62.4%, reflecting intensifying inflation pressures tied to tariff threats.

Industry analysts noted that orders likely benefited from front-loading ahead of impending tariffs, as businesses raced to secure inputs before cost increases took hold. Meanwhile, regional surveys—such as the Philadelphia Fed’s Manufacturing Business Outlook—indicated continued expansion, albeit with modest declines in activity, new orders, and shipments; employment remained positive, and price indexes stayed elevated.

Why It Matters

1. Resilient demand amid volatility: Despite growing geopolitical friction and looming tariffs, manufacturers appear to be responding with cautious optimism, evidenced by sustained order growth.
2. Mixed strength beneath the surface: While headline factory orders rose, weaker commercial aircraft orders and softening core capital goods demand signal potential areas of fragility.
3. Cost pressures mount: Accelerating supplier prices and supply chain challenges suggest margins may soon be squeezed if tariffs persist or broaden.

The Bottom Line

Factory orders surged by 0.6% in February—to $594 billion—a second straight monthly gain that outpaced expectations, driven largely by durable and transportation‐related goods. Yet, the softness in key investment metrics and surging input costs underscore a manufacturing sector navigating through both strength and caution.

Disclaimer: Data subject to revision.