WASHINGTON, Feb. 23, 2026 — U.S. factory orders fell in December, pulled lower by a decline in commercial aircraft bookings that weighed on overall manufacturing demand, according to government data reported by Reuters. The decrease followed prior month fluctuations and reflected the significant role transportation equipment plays in shaping headline figures.

Factory orders measure new commitments for both durable and nondurable goods and serve as an indicator of industrial momentum. In December, transportation equipment accounted for most of the decline, with commercial aircraft bookings driving much of the movement. Because aircraft contracts are large and irregular, shifts in that sector can quickly alter monthly totals.

The Commerce Department’s report showed that overall orders slipped after earlier gains tied to aerospace activity. Analysts caution that aircraft transactions can distort the broader picture, which is why core measures that exclude transportation are closely monitored. That divergence was evident again in the December data and highlighted the influence of aerospace activity on the monthly figures.

Transportation Equipment Leads the Drop

Transportation equipment includes motor vehicles, parts and aerospace products, and it remains one of the most volatile components of factory orders. In December, commercial aircraft bookings declined, reducing the total value of new orders nationwide. Even moderate adjustments in airline purchasing plans can influence national manufacturing statistics.

Aircraft orders tend to be booked in large increments, and the timing of those contracts can vary from month to month. As a result, transportation equipment frequently determines whether total factory orders rise or fall. December followed that pattern, with aerospace demand shaping the headline number.

While transportation pulled totals lower, other manufacturing categories showed mixed results. Some industries recorded modest gains, while others experienced limited movement. That mix highlighted the uneven nature of industrial demand at the close of the year.

Core Orders Offer a Different View

Economists often examine factory orders excluding transportation equipment to assess underlying business spending. This measure helps reduce the volatility associated with aircraft contracts and provides a clearer picture of capital investment trends.

In December, the divergence between total orders and core figures highlighted the influence of aerospace bookings. Business investment in equipment remains an important component of economic activity, and orders for capital goods are viewed as an indicator of future production plans.

By separating transportation from other sectors, analysts can better determine whether changes reflect broad shifts in demand or are concentrated in one industry. The December data suggested that much of the overall decline stemmed from aircraft activity rather than widespread weakness across manufacturing.

Manufacturing Data and Economic Signals

Factory orders are closely watched because they feed into broader assessments of economic growth. Changes in new orders can affect production schedules, inventory planning and hiring decisions across industrial firms. The December report provided insight into year-end conditions and shaped expectations for the start of the new year.

Capital Goods and Business Investment: Orders for non-defense capital goods excluding aircraft are often viewed as a proxy for business investment. This category reflects corporate spending on machinery and equipment and can indicate whether firms are expanding capacity or maintaining existing operations. In December, that measure offered additional context beyond the headline decline, suggesting that underlying investment patterns were not solely defined by aerospace activity.

Because capital expenditures shape productivity and output over time, economists track this category closely. Movements in these orders can influence projections for manufacturing output and broader economic growth in subsequent quarters.

Industrial Production and Growth Outlook: Factory orders also interact with industrial production data, which measure actual output rather than new commitments. When orders fall, production levels may adjust in the months that follow, depending on backlogs and inventory levels. December’s decline in aircraft bookings therefore carries implications beyond a single report.

Manufacturing remains a significant component of the U.S. economy, and shifts in demand can ripple through supply chains and related industries. While one month of data does not establish a long-term direction, the latest figures highlight how sector specific changes can influence national economic indicators.

As additional reports are released, analysts will compare December’s results with subsequent data to determine whether the decline reflects temporary volatility or a broader change in industrial demand. For now, the numbers underscore the weight aircraft bookings carry in monthly factory order totals and the importance of examining both headline and underlying measures when evaluating manufacturing performance.