On July 25, new U.S. government data showed business equipment investment cooled noticeably in the second quarter of 2025. Orders for core capital goods—those excluding defense and aircraft—fell by 0.7 percent in June, reversing momentum from earlier gains, while shipments edged up a modest 0.4 percent. This pattern suggests companies are delaying equipment purchases amid policy uncertainty and rising costs tied to tariffs.
Businesses had front-loaded some investments in the first quarter to beat looming tariffs; but with broader uncertainty around future tariff levels and supply chain volatility, many firms have pulled back. Analysts estimate that annualized growth in equipment investment likely dropped from a robust rate near 24 percent in Q1 to single-digit or even negative territory in Q2.
Large companies across industries are adjusting capital allocations accordingly. Some are scaling back planned capital expenditures, reprioritizing projects, and reconsidering supply chain configurations to better manage tariff exposure. One commodity producer even cut its capital budget by hundreds of millions while pausing hiring to neutralize input-cost risks.
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Equipment financing firms report greater demand for flexible arrangements. Leasing programs, deferred payments, and subscription models are helping companies navigate budget constraints while preserving access to crucial tools.
While shipments have risen slightly, the disconnect between orders and deliveries reflects concerns over short-term demand and cost projections. Firms are increasingly cautious in deploying capital until trade policy clarity improves or inflationary pressures ease.
The slowed investment trend comes amid broader macro risk: economists warn that policy uncertainty and inflated tariffs present headwinds to growth. Several forecasts were recently revised downward, citing that elevated trade tensions and rising input prices are dampening optimism and capital spending.
In summary, the cooling in equipment orders in Q2 reflects a shift by businesses toward more conservative capital strategies. As firms recalibrate in light of trade policy ambiguity and cost pressures, Q2 may mark the start of a more cautious phase in corporate investment planning—even as modest rebound is possible with greater clarity ahead.
