AI investments are supporting "half the sky"! US core capital goods orders in March register the largest increase in 6 years.

U.S. business equipment orders in March saw the largest increase since mid-2020, continuing the steady trend of strong capital investment driven by expenditures on artificial intelligence (AI) for over a year. Data released by the U.S. Department of Commerce on Wednesday showed that the value of core capital goods orders (excluding aircraft and military equipment, which is an alternative indicator for equipment investment) surged by 3.3% in March compared to February, which was revised up to 1.6%. All durable goods orders (goods expected to last at least three years, including aircraft and military equipment) grew by 0.8%, showing broad growth overall. The Core Capital Goods Orders in the U.S. saw the largest increase since the pandemic Economist Eliza Winger stated, "Supported by expenditures related to artificial intelligence, business investment maintains strong momentum at the start of the second quarter. While geopolitical uncertainties are worth noting, the data has not shown any significant retractions in capital expenditures." Economists predict that as businesses continue to invest in and take advantage of more favorable tax incentives in the artificial intelligence field, U.S. business investment will remain solid this year. However, the extent to which businesses will remain cautious if the Middle East conflict is not resolved quickly is uncertain. This conflict has significantly raised the prices of oil and other commodities. The durable goods report showed increases in orders for communication equipment, electrical hardware, as well as motor vehicles and parts. Military aircraft orders also significantly increased, while machinery and metal orders also grew. Non-defense capital goods shipments (part of the equipment investment reported directly in the Gross Domestic Product (GDP) report carried out within the country) grew by 0.5% in March. The report also showed that the less volatile core capital goods shipments (excluding aircraft and military hardware) increased by 1.2% in March, after the February data was revised up to show growth of 1.3%. Economists prefer core equipment shipments and order data, as these indicators can more clearly reflect trends in business basic investment and their impact on the economy. Meanwhile, another set of data released on Wednesday showed that the U.S. trade deficit in goods expanded for the second consecutive month in March. The goods trade deficit widened by 5.3% from the previous month to $879 billion, in line with the median estimate of economists; imports increased more than exports. Economists will use durable goods orders and trade data to adjust their forecasts for first-quarter economic growth. The U.S. Bureau of Economic Analysis (BEA) will release its preliminary estimate of first-quarter GDP on Thursday. Before the durable goods report was released, the Atlanta Fed's GDPNow model projected that U.S. economic growth in the first quarter would rise to 1.2%. However, in the last few months of 2025, dragged down by the federal government shutdown, the U.S. economy only grew by 0.5%. Before the data was released on Wednesday, the Atlanta Fed projected that business equipment investment would contribute 0.77 percentage points to first-quarter economic growth, while net exports are expected to drag down by about 0.9 percentage points.