After the contraction of the first quarter, most analysts expected a rebound in Q2, but today’s durable goods report from the Census Bureau delivers at best a mixed bag. Overall, durable goods orders declined by 1.8%, and outside of defense orders, the decline was even steeper at -2.1%. However, when the volatile transportation sector is excluded, orders actually rose 0.5%. Business investment looks even worse, though, as capital orders outside the defense sector plummeted 6.6% — but aircraft orders accounted for the drop:

New orders for manufactured durable goods in May decreased $4.1 billion or 1.8 percent to $228.9 billion, the U.S. Census Bureau announced today. This decrease, down three of the last four months, followed a 1.5 percent April decrease. Excluding transportation, new orders increased 0.5 percent. Excluding defense, new orders decreased 2.1 percent. Transportation equipment, also down three of the last four months, drove the decrease, $4.9 billion or 6.4 percent to $71.7 billion. …

Nondefense new orders for capital goods in May decreased $5.2 billion or 6.6 percent to $74.3 billion. Shipments decreased $0.5 billion or 0.6 percent to $79.3 billion. Unfilled orders decreased $5.0 billion or 0.7 percent to $757.1 billion. Inventories decreased $1.1 billion or 0.6 percent to $176.2 billion. Defense new orders for capital goods in May increased $0.7 billion or 8.2 percent to $8.8 billion. Shipments increased less than $0.1 billion or 0.3 percent to $9.5 billion. Unfilled orders decreased $0.7 billion or 0.5 percent to $150.6 billion. Inventories decreased less than $0.1 billion or virtually unchanged to $21.6 billion.

April’s report, which had seen an overall decline of 1.5%, was revised slightly downward in all categories.

The business outlook is a mixed bag. Despite the overall drop in capital goods (-5.2%, -6.6% for non-defense), the category rose 0.4% once aircraft orders are excluded. That’s still below analyst expectations for Q2, and barely balances out the -0.3% figure from April. Bloomberg’s analysts offer a positive spin on the small rate of business-investment growth, along with a double entendre delivered … unexpectedly:

Vonnie Quinn may just have become my favorite economy reporter.

The Associated Press offers a slightly less rosy take on today’s figures:

American factories have struggled this year in part because a strong dollar has made U.S. goods more expensive overseas. Cheaper oil prices also mean energy firms are buying less equipment. So far this year, durable goods orders are down 2.2 percent from January-May 2014. The category that tracks business investment is down 2.6 percent through May this year.

Last week, the Federal Reserve said manufacturing output dropped 0.2 percent in May. The Federal Reserve Bank of New York also reported that factory activity in New York state contracted in June. But factories around Philadelphia expanded this month at the fastest pace since December, the Philadelphia Fed reported last week.

Analysts believe that the contraction in Q1 relates to an especially cold winter and some issues in seasonal adjustments to economic data, and that Q2 will show a sharp rebound. So far, the first two durable goods reports of the quarter don’t show much sign of a significant rebound, although they’re not exactly demonstrating a recession either. Don’t be surprised to see estimates for Q2 to start descending back into the stagnation range.