US Factory Orders Rise 1.8% as AI Investment Supports Manufacturing Growth

US factory orders increased more than expected in September, providing another sign that demand for manufactured goods remains resilient despite uncertainty around costs, trade and the wider economy.

New orders for manufactured goods rose 1.8% during the month, according to data released by the US Commerce Department on 3 November. Economists surveyed by Reuters had expected a 1.2% increase.

The latest figure followed an upwardly revised 0.3% increase in August. Factory orders were also 7.2% higher than a year earlier.

Aircraft and technology drive demand

A significant part of September's increase came from civilian aircraft and parts, where bookings jumped 28.3%. Machinery orders also increased by 1.5%, while orders for computers and electronic products rose 0.8%.

Computer and electronics orders were particularly strong compared with the previous year, climbing 14.9%.

The expansion of artificial intelligence infrastructure is helping support demand for equipment, alongside continued consumer spending. Companies investing in data centres, computing capacity and related technology are creating opportunities for manufacturers and suppliers across the industrial ecosystem.

Orders for non-defence capital goods excluding aircraft, a measure often used to assess business investment plans, increased by 0.6%. Shipments of these core capital goods rose 1.2%.

However, the recovery is not uniform across every manufacturing category. Orders for electrical equipment, appliances and components declined by 0.3%.

Growth comes with cost pressures

Despite stronger factory orders, manufacturers are still dealing with difficult operating conditions.

A recent Institute for Supply Management survey showed US manufacturing activity expanding in October, but business sentiment remained under pressure. Companies reported pricing volatility, longer supplier delivery times, tariffs and geopolitical tensions as ongoing challenges.

Economists have also warned that higher interest rates and weaker inflation-adjusted household income could weigh on manufacturing activity in the coming year, particularly for businesses that are not benefiting directly from AI-related investment.

What does this mean for businesses?

The figures suggest that opportunities remain in industrial supply chains, particularly for companies providing machinery, electronics, components and specialist manufacturing services.

Smaller manufacturers may benefit from increased demand from larger businesses investing in technology infrastructure. However, winning new contracts is only part of the challenge. Suppliers must also manage material costs, delivery schedules and the working capital required to fulfil larger orders.

For founders considering expansion, the data offer an encouraging signal, but not a reason to ignore financial discipline. Stronger orders do not automatically translate into stronger profits, especially when input costs and financing remain uncertain.

The US manufacturing sector is benefiting from major investment in AI and technology, but businesses will need to demonstrate that this demand can translate into sustainable growth beyond the current investment cycle.

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Discussion question: Is AI infrastructure investment creating a lasting opportunity for smaller manufacturers, or could the demand fade once the current spending boom slows?