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Economic indicators - D

Durable Goods Orders

This is a government index that measure the level of orders placed at US factories for expensive durable items such as machinery and vehicles. Durable goods are new or used items generally with a normal life expectancy of three years or more. Analysts exclude defense and transportation orders because of their volatility.

This report gives us information on the strength of demand for U.S. manufactured durable goods, from both domestic and foreign sources. When the index is increasing, it suggests demand is strengthening, which will probably result in rising production and employment. A falling index suggests the opposite.

Orders for durable goods show how busy factories will be in the months to come, as manufacturers work to fill those orders. The data not only provide insight to demand for things like refrigerators and cars, but also business investment going forward. If companies commit to spending more on equipment and other capital, they are obviously experiencing sustainable growth in their business. Increased expenditures on investment goods set the stage for greater productive capacity in the country. Additionally, it reduces the prospects for inflation. That tells investors what to expect from the manufacturing sector, a major component of the economy.

A strong figure is positive for the US currency.

Source: The Census Bureau of the Department of Commerce.

Availability: Around the 26th of the month at 8:30 a.m. (EST). Data for prior month.

Frequency: Monthly.

The Durable Goods Orders index is a major indicator of manufacturing sector trends as most industrial production is done on orders. Rising Durable Goods Orders are normally associated with stronger economic activity and can therefore lead to higher short-term interest rates, which is usually supportive for a currency at least in the short term.