Washington, DC, September 4 - In July 2025, U.S. factory orders experienced a notable decline, primarily driven by a significant drop in commercial aircraft bookings, according to data from the Commerce Department’s Census Bureau. New orders for manufactured goods fell by 1.3%, following a substantial 4.8% decrease in June. This downturn was largely attributed to a 32.7% plunge in commercial aircraft orders, reflecting ongoing challenges in the aerospace sector. Despite this, the manufacturing sector showed some resilience, with orders advancing 3.5% year-on-year, indicating that while specific industries faced headwinds, overall demand for U.S.-made goods remained positive. The decline in aircraft bookings highlights vulnerabilities in a key manufacturing segment, compounded by external pressures such as tariffs on imports and supply chain constraints, which have been particularly disruptive to aerospace production.
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The aerospace industry’s struggles in July were not isolated but part of a broader pattern of volatility in commercial aircraft demand. For instance, Boeing, a major player in the U.S. aerospace market, has faced significant challenges, including production slowdowns due to a machinists’ strike and safety concerns that have hampered its ability to ramp up output. Meanwhile, Airbus, though a European manufacturer, also impacts U.S. factory orders through its supply chain connections, and it too reported difficulties in meeting delivery targets due to supply chain issues. These factors have created a ripple effect, reducing the flow of new orders to U.S. factories that supply parts and components for aircraft assembly. However, other sectors, such as motor vehicles, computers, electronics, electrical equipment, appliances, and machinery, saw rebounds in orders, suggesting that the manufacturing sector’s challenges were not uniform across all industries.
The broader manufacturing landscape in the U.S. has been navigating a complex environment shaped by economic policies and global trade dynamics. The Institute for Supply Management’s manufacturing PMI indicated contraction for the sixth consecutive month in August, underscoring persistent difficulties. Tariffs on imported goods, including a 25% tariff on steel and aluminum implemented in early 2025, have increased costs for manufacturers, particularly in aerospace, where raw materials are critical. A U.S. appeals court ruling in late August 2025 declared many of these tariffs illegal, adding further uncertainty to the sector. Despite these challenges, business spending on equipment remained robust in the second quarter, contributing to a 3.3% annualized economic growth rate, which suggests that some manufacturers are continuing to invest in capital goods even amidst aerospace sector weaknesses.
Looking ahead, the outlook for U.S. factory orders remains uncertain as the aerospace industry grapples with structural and policy-driven challenges. Both Boeing and Airbus face ambitious production targets for 2025, but supply chain bottlenecks and tariff-related disruptions could delay recovery. Boeing delivered 48 aircraft in July, while Airbus delivered 67, yet both manufacturers are struggling to meet their annual goals. Airbus aims for 820 deliveries in 2025, requiring a significant ramp-up, while Boeing focuses on stabilizing production rates, particularly for its 737 MAX. The combination of weak commercial aircraft bookings and external pressures like tariffs could continue to weigh on factory orders in the near term, though the resilience of other manufacturing sectors offers a buffer against a broader downturn.