U.S. Factory Orders Rebound in January, Driven by Surge in Aircraft Demand

The sharp rise in aircraft orders was a key driver of the overall factory orders rebound. Aircraft manufacturers, including Boeing and Airbus, saw a spike in demand from airlines looking to modernize their fleets amid a recovering travel industry. This trend aligns with increased air travel demand and fleet expansion efforts following supply chain disruptions in previous years.

Despite the boost from the aviation sector, the broader manufacturing industry still faces significant headwinds. The imposition of new tariffs on imported materials, particularly those critical to industrial production, is expected to drive up costs for manufacturers. Higher prices on steel, aluminum, and electronic components could squeeze profit margins and dampen investment in domestic manufacturing.

Economists caution that the current rebound in factory orders may not be sustainable if cost pressures continue to mount. While demand for durable goods remains relatively stable, sectors outside of commercial aircraft manufacturing have shown weaker growth. Orders for core capital goods—excluding aircraft and defense—remained flat, highlighting lingering uncertainty in business investment.

The latest data comes as policymakers and industry leaders assess the long-term implications of trade policies on domestic production. Some analysts argue that the new tariffs could incentivize reshoring of manufacturing jobs, while others warn of retaliatory measures from trade partners that may disrupt supply chains.

Although factory orders showed resilience in January, sustaining growth in the coming months will depend on how manufacturers navigate cost increases and evolving trade dynamics. The manufacturing sector remains a key pillar of the U.S. economy, and its trajectory in 2025 will be shaped by both policy decisions and global economic conditions.