By Gabriella Bass

U.S. durable goods orders posted a modest rebound in March, evidence of stabilization that nonetheless fell short of signaling a broader manufacturing resurgence.

Orders for long-lasting goods rose 0.8% to $318.9 billion last month after three consecutive monthly declines, according to new Census Bureau data. Excluding transportation, orders rose a slightly stronger 0.9%. But when defense spending is stripped out, orders declined 0.3%, underscoring uneven demand across sectors and tempering optimism about the headline figure.

“Taken together, the data reflected an economy that is treading water rather than building momentum,” said John Landon-Lane, an economics professor at Rutgers University. Gains were driven in part by strength in computers and electronic products, suggesting that the broader corporate push toward digital transformation is providing a cushion against weaker sectors.

“This is fairly neutral,” Landon-Lane said, pointing to a pattern of small, inconsistent moves in recent months. “If you look at the last few months it’s been negative, but it’s been small.” In his view, the data reflects an economy treading water—neither cratering nor building momentum.

More importantly, Landon-Lane cautioned that the report may not yet capture the full weight of geopolitical and macroeconomic uncertainty shaping business decisions. “I don’t think this report is going to incorporate the current quagmire that we have in Iran,” he said, suggesting that external risks could weigh more heavily on future data.

For now, that uncertainty appears to be translating into hesitation among firms. Instead of committing to large capital investments, companies’ capital is increasingly tied up in unsold goods as a steady six-month rise in inventories signals a slowdown in consumer spending. 

In March alone, inventories of manufactured durable goods edged up 0.2 percent, or $1.4 billion, to $596.9 billion, showcasing a market where production is outpacing actual demand.

“Everybody’s just waiting for uncertainty to play out,” Landon-Lane said. “In periods of great stress and crisis, most people aren’t making investment decisions for expansions.”

While firms must still place orders to cover basic depreciation and replace aging equipment, Landon-Lane argues that these baseline purchases should not be mistaken for real economic expansion. “Any discussion or hope that we’re at the start of a big expansion, there’s no evidence there yet.”

Other economists see more encouraging signals beneath the surface. Core capital goods orders, a proxy for business investment, rose 3.3% in March, a “pretty solid increase,” said Justin Begley, an economist at Moody’s.

Begley also highlighted a structural trend supporting demand: continued investment in artificial intelligence and digital infrastructure. “We’re seeing a continuing trend of businesses that are very interested in expanding AI infrastructure, technology, adoption and capabilities,” he said. That aligns with the strength in computers and electronic products, which have now increased in 11 of the last 12 months.

On the ground, however, manufacturers and contractors describe a more complicated reality- one shaped by volatile input costs and shifting contract dynamics.

Andrew Trinchese, owner of Trinchese Iron Works, a steel company based in East New York Brooklyn, said recent months have brought sharp swings in the cost of key inputs. “Steel prices went up early, then fuel went down, but now fuel’s going back up,” he said. The back-and-forth makes it difficult to price jobs accurately and protect margins.

For projects already underway, firms often have little choice but to absorb rising costs. “A lot of it right now we’re eating because you’re already contracted to do a job- you can’t really just change the prices,” Trinchese said.

To manage that risk going forward, companies are adjusting how they structure new agreements.

“Any new jobs, we accommodate for fuel surcharges,” he said. In some cases, firms are also building explicit escalation clauses into contracts to account for potential tariff-driven increases in materials like steel. “We put it in our contract, if it goes up, we’ll be transparent, and the client will have to pay it,” he said.

Taken together, the March data paints a picture of an industrial economy caught between resilience and restraint. While pockets of strength- particularly in technology investment- are supporting orders, broader uncertainty and cost pressures continue to weigh on business confidence.

For policymakers and investors, the question is whether the recent rebound marks the beginning of a more sustained recovery or simply a pause in a choppy, sideways trend. For now, the answer appears to depend less on past data than on how firms respond to the uncertain road ahead.