What's driving an increase in orders for transportation equipment?

Transportation durable goods orders — that includes semitrucks, trains, and planes — were up 2.3% month-over-month in July, according to the latest Census Bureau report. That follows two consecutive monthly decreases.

The uptick may not signal much about the broader economy — pricey durable goods orders are volatile by nature.

Tim Quinlan, senior economist at Wells Fargo, doesn’t give a lot of weight to the month-to-month transportation equipment order data. He says it’s kind of like a scary elevator.

“If you came up on an elevator and instead of up and down the button said ‘soar and plunge,’ no one would get on, right?” he said.

Transportation order numbers soar and plunge unpredictably, Quinlan said, because of big ticket items like literal airplanes.

“If Boeing gets a big order at the Paris Air Show, it'll surge one month and plummet the next,” he said. It wasn’t Paris, but actually England, where Boeing secured 173 plane orders in July.

But there is a little more to the transportation order numbers lately, said Ken Vieth, a senior analyst with ACT Research.

“There's an old saying in the industry that, ‘If you bought it, a truck brought it,’” he said.

Thanks to all the data center construction this year, truckers have a lot of hauling to do.

“When truckers make money, they, in turn, buy trucks and trailers,” Vieth said.

Especially recently, because an impending federal emission regulation could drive costs up. “So on Jan. 1 of next year, a truck is still going to cost a lot more than a truck that you can order this year,” Vieth said.

Pre-buying like that is something big trucking companies can afford, said Jim Xintaris, a Peterbilt dealerships manager in the Detroit metro. But smaller operations aren’t thinking about new trucks, he said. They’re trying to figure out how to make payroll when fuel costs are so high.

Planning out payroll and equipment orders takes predictability. Xintaris said he used to plan nine to 18 months out. Now, that’s not possible.

“This cycle has gone now to monthly, where next month you do not know what is going to happen,” he said.

There’s the ongoing war with Iran and on-again, off-again tariffs. Michael Belzer, an economist at Wayne State University, said the transportation sector might have seen a window to buy equipment in July.

“With all that volatility, they may have been suppressing their orders, and now they're catching up,” he said.

But it’s likely a short window. Impending U.S.-Canada tariffs could raise costs on engines and parts.