Core Capex Flatlines at 0.0% While Aircraft Prop Up Shipments: January’s Factory Report Isn’t What It Seems

On the official release dated 2026-03-13, the January factory data looked steady at the top line—but the investment engine under the hood sputtered. Total new orders were essentially unchanged at 321,193 vs 321,327 (0.0%), while the true business-investment proxy—nondefense capital goods excluding aircraft—posted 0.0% orders growth (79,265 vs 79,286) and a -0.1% drop in shipments. Headlines read “stable.” The private capex signal said “stall.”

Here’s what the data reveals:

• Capital goods orders fell -1.1%, contradicting any broad momentum narrative

• Transportation new orders -0.9%, but nondefense aircraft rose +3.8% as defense aircraft plunged -23.7%

• Total shipments +0.6% were buoyed by an +8.0% surge in nondefense aircraft shipments; autos were soft (-0.3%)

• Defense capital goods orders -11.8%, yet shipments rose +0.9% and are up +25.4% YTD, dwarfing private-core shipments (+4.3% YTD)

• “Manufacturing with unfilled orders” showed new orders -0.2% and shipments +0.8%, implying backlogs are being drawn down behind steady headlines

• December was revised (“r”) weaker in key places—capital goods -3.2%, nondefense capital goods -6.7%, transportation -4.6%, defense cap goods +21.6%—reinforcing that late-2025 strength was aircraft/defense-heavy

January 2026 Highlights (as published 2026-03-13)

The Headline Is Calm; The Capex Heartbeat Is Not

January delivered the neatest contradiction a manufacturing report can offer: stable totals alongside a flatlining core. The business-investment proxy—nondefense capital goods ex-aircraft—showed 0.0% orders with -0.1% shipments. Meanwhile, capital goods orders fell -1.1%, and the spread between orders and shipments widened: capital goods shipments rose +1.3% in January while new orders dropped -1.1%. That’s not fresh demand; it’s likely backlog draw.

Zooming out to the three-month pattern published on 2026-03-13:

• Total new orders: Nov +5.4% → Dec -0.9% (r) → Jan 0.0%

• Ex-transport: Nov +0.5% → Dec +1.3% → Jan +0.4% (positive, but fading)

• Capital goods: Nov +15.4% → Dec -3.2% (r) → Jan -1.1% (volatility without trend)

• Core capex (nondefense ex-aircraft) orders: Nov +0.9% → Dec +0.8% → Jan 0.0%

The “ex-transportation is better” story (+0.4% in January) simply doesn’t map to capex acceleration. Core capex is the cleanest read on private equipment demand, and it’s stalled.

Aircraft’s Optical Illusion: Shipments Up, Signal Down

Transportation looked weak on orders (-0.9%), but shipments rose +1.0% thanks to an +8.0% jump in nondefense aircraft. Strip out the jets, and the engine misfires:

• Defense aircraft orders cratered -23.7%

• Motor vehicles and parts: orders -0.4%, shipments -0.3%

This is the shell game: aircraft make shipments look healthy while core execution and autos are soft. The year-to-date mix underscores it—new orders gains are concentrated in transportation (+19.4% YTD), particularly nondefense aircraft (+93.5% YTD), while nondefense capital goods ex-aircraft orders are up just +2.9% YTD. Investors who buy the headline are buying the aircraft cycle; everyone else is slowing.

Defense vs. Private: Two Economies, One Report

Defense capital goods new orders fell -11.8% in January, but shipments still rose +0.9% and are up a striking +25.4% YTD, compared with +4.3% YTD for private core shipments (nondefense ex-aircraft). That divergence matters:

• It distorts aggregate growth optics: total activity looks solid while private investment cools.

• It complicates forecasting: defense outlays are lumpy and policy-driven; they don’t translate into broader equipment demand or productivity trends.

• It shifts sector leadership to aerospace/defense and away from general industrials.

Add in “Manufacturing with unfilled orders” dynamics—new orders -0.2% vs shipments +0.8%—and it’s clear producers are likely consuming backlog rather than booking new business. That cushions near-term output but sets up a softer production path if orders don’t reaccelerate.

Revisions Tell the Real Story (and It’s Softer)

December’s revisions (“r”) were not window dressing; they reset the narrative:

• Capital goods new orders: -3.2% (r)

• Nondefense capital goods: -6.7% (r)

• Transportation: -4.6% (r)

• Defense capital goods: +21.6% (r)

Translated: late-2025 was aircraft/defense-heavy, and the apparent momentum faded into a January stall in core capex (0.0%). The November pop, especially in aircraft, was largely retraced.

On the “tech is back” angle, be careful. Computers and electronic products posted +0.8% orders and +1.1% shipments, with communications equipment the standout (+4.9% orders; +5.2% shipments). But per the footnote, new orders exclude semiconductors—so this strength sits outside the semi cycle and doesn’t necessarily signal a capex-driven chip rebound.

Three-Month Trajectory (Nov–Dec(r)–Jan)

The slope is flattening where it matters most for private investment.

What This Means for Markets

• Rates and the curve:

• Equities—winners and laggards:

• Credit:

• Macro watchlist:

Positioning Ideas (Not Investment Advice)

• Tilt industrial exposure toward aerospace/defense while keeping a defensive stance in broad capital goods until core capex re-accelerates.

• Prefer quality over beta in industrials; earnings beats will require bookings to catch up with shipments.

• Consider modest duration add on capex softness; favor nominals over TIPS at the margin if weaker private investment tempers medium-term inflation pressure.

• Watch communications equipment beneficiaries, but validate order sustainability given the semiconductor exclusion.

The Investor Takeaway

January’s factory report, released 2026-03-13, wears an even keel but flies on aircraft power. Strip out the fuselage gloss and the core capex pulse is flat (0.0%), shipments are leaning on backlog draw, and defense is doing more heavy lifting than the private sector. If your thesis requires broad-based reacceleration in equipment demand, the data just told you to wait. If it requires aircraft and defense to keep carrying the tape, you still have runway—just don’t mistake altitude for lift across the rest of industrials.