Aircraft Whiplash Masks a Solid +0.6% Core Capex Gain: December Durables’ -1.4% Headline Misleads

The official press release dated 2026-02-18 served up a headline drop—total durable goods new orders fell 1.4% m/m in December—while the core of the machine kept grinding higher. Strip out transportation and orders actually rose 0.9%, with the core nondefense capital goods ex‑aircraft proxy—the cleanest read on private-sector equipment investment—up 0.6% (shipments up 0.9%). The culprit? Transportation’s -5.3% swing, hammered by a -24.9% plunge in nondefense aircraft after November’s eye-watering +98.2% surge. In short: headline noise, core stability.

Here’s what the data reveals:
- Core capex ex‑aircraft rose for a third straight month: +0.5% (Oct), +0.8% (Nov), +0.6% (Dec); shipments also improved (+0.8%, +0.2%, +0.9%).
- Orders fell while shipments rose in December—total orders -1.4% vs shipments +1.0%—a backlog drawdown that flatters near-term GDP but softens the forward pipeline.
- Defense vs private split: defense capital goods orders jumped +22.2% m/m; nondefense capital goods fell -7.6%, but ex‑aircraft still rose +0.6%.
- YTD strength is concentrated: total new orders +7.8% YTD vs +2.8% ex‑transportation. Nondefense aircraft and parts are up +106.2% YTD; “All other durable goods” are flat (0.0%).
- Revisions matter: October total shipments were revised down from 309,634 (+0.6%) in the 2025-12-23 release to 309,345 (+0.5%) in the 2026-02-18 release—cool the hot takes on initial prints.

Industry detail (December, SA):
- Machinery: orders +0.3%, shipments +1.2%
- Primary/fabricated metals: orders +1.7% / +0.9%, shipments +2.1% / +0.8%
- Motor vehicles & parts: orders +1.2%, shipments +1.0%; YTD orders +1.4%, shipments +1.2%
- All other durable goods: orders -0.2%, shipments -0.3%; YTD 0.0%

Aircraft Whipsaw vs. Core Capex Reality

Transportation turned the headline into a funhouse mirror. December’s -5.3% drop in transportation orders was almost entirely aircraft-related—nondefense aircraft fell -24.9% after a +98.2% spike in November. That volatility is burying the steady climb in the core capex proxy: +0.5%, +0.8%, +0.6% over the last three months, with shipments tracking +0.8%, +0.2%, +0.9%. For GDP, equipment spending enters Q4 with a tailwind; for sentiment, the headline screams slowdown while the guts whisper resilience.

The YTD figures underscore the point: total orders +7.8%, transportation +18.2%, total capital goods +18.4%—but core nondefense capex ex‑aircraft is only +3.5%. Solid, not spectacular. The momentum story belongs to jets, not to the broad private-capex complex.

The Backlog Burn: Why Shipments Look Hot While Pipelines Cool

December delivered a classic divergence:
- Total durable goods: orders -1.4% vs shipments +1.0%
- Capital goods: orders -3.9% vs shipments +1.9%
- “Manufacturing with unfilled orders”: shipments +1.3%, new orders -2.0%

Translation: producers are drawing down backlogs to keep docks busy. That props up near-term shipments (and GDP nowcasts) but erodes future production unless orders re-accelerate. One exception: communications equipment saw orders +2.0% vs shipments -1.2%—a small but telling backlog build in a niche that’s been lumpy across the cycle.

In the trenches, machinery and metals look like stabilization, not boom. Machinery’s +0.3% orders with +1.2% shipments suggests healthier execution than intake—again, backlog work. Primary and fabricated metals show broad, modest improvement (orders +1.7% / +0.9%), consistent with a floor forming across old-economy industrials. Autos remain flat-to-tepid.

Defense Strength Isn’t a Private Capex Signal

December’s +22.2% jump in defense capital goods might headline well, but it’s procurement timing, not business animal spirits. Nondefense capital goods fell -7.6%—but strip aircraft and you’re back to +0.6%. Using defense to proxy private demand would mislead; the private core tells a steadier story of incremental growth.

This distinction matters for earnings and multiples. Defense primes and key subs ride funding cycles and contract timing; private industrials live on bookings, backlog health, and pricing power. December’s split reminds investors to separate those currents when reading capex tea leaves.

The YTD Mirage: Transportation Carries the Banner

The temptation is to cheer the +7.8% YTD gain in total new orders. Resist it. The heavy lifting came from nondefense aircraft and parts (+106.2% YTD), which inflated transportation (+18.2%) and total capital goods (+18.4%). Core ex‑transportation is a more sober +2.8% YTD, and core nondefense ex‑aircraft sits at +3.5% YTD. Meanwhile, “All other durable goods” are 0.0%—a flatline that punctures any broad-based boom narrative.

For equity allocation, that concentration means the aircraft complex is a volatility engine for aggregates and for suppliers levered to widebody/narrowbody cadence. It also means many industrials will report decent shipments against softening order intake—a mix that flatters near-term earnings but can challenge H2 visibility.

Revisions and Narrative Drift

Revisions in the 2026-02-18 release tightened the screws on prior optimism: October total shipments fell to 309,345 with +0.5% m/m, down from 309,634 and +0.6% in the 2025-12-23 release. It’s a minor trim, but it reinforces a key discipline: discount initial volatility—especially in aircraft and defense—when distilling the private capex signal. Prior headlines loved November’s +5.4% total orders pop; the through-line all quarter was quieter—gradual core improvement alongside aircraft roulette.

What This Means for Markets

• Equities: Favor industrials with diversified end-markets and demonstrable backlog quality. Machinery and metals showing low-single-digit order gains with faster shipments suggest near-term EPS support but rising H2 guide risk if orders don’t reaccelerate. Be selective in aerospace suppliers: platform exposure wins; overreliance on episodic bookings invites drawdowns.

• Defense: The +22.2% m/m orders jump validates near-term momentum. Margin visibility remains superior to most cyclicals; dips remain buyable so long as appropriations stay intact.

• Rates and macro: Core capex’s +0.6% and shipments’ +0.9% tilt near-term GDP higher, but backlog burn is disinflationary for production ahead unless orders firm. Bonds may read this as steady growth with limited overheating—supportive for a soft-landing narrative.

• Credit: Backlog drawdowns boost cash conversion in Q4/Q1 but could stretch receivables if shipments outpace new orders. Monitor unfilled-orders-to-shipments ratios and book-to-bill in Q1 calls.

• Autos and “all other durables”: With YTD orders +1.4% in autos and 0.0% in the catch-all bucket, these remain tactical, not thematic, longs. Pricing power is waning; cost control and mix matter more than volume.

What to watch next:
- January/February core nondefense capex ex‑aircraft orders: does the three-month +0.6% avg hold?
- Backlog metrics in manufacturer commentary: do order books stabilize after December’s drawdown?
- Aircraft order announcements: separating press-release theater from booked-and-billed reality.
- Revisions in subsequent releases: small trims compound into real narrative shifts.

The Investor Takeaway

• Tilt toward quality industrials with sticky backlog and low aircraft dependence; pair with defense primes/mission-critical subs.

• Use strength in shipment-driven beats to lighten up where order intake is lagging; redeploy into names with improving book-to-bill.

• Hedge aircraft volatility with a barbell: defense exposure on one side, select aftermarket/maintenance providers on the other.

• For macro hedges, a modest duration add is defensible: core capex is steady, not sizzling; backlog burn argues against an overheating upswing.

December’s -1.4% headline is a siren song for the bearish. The melody underneath is steadier: core capex up 0.6%, shipments up 0.9%, and a backlog doing the heavy lifting. Follow the core, not the cockpit.