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Economics - Durable Goods




Release Date:
On or around the 20th of each month (advance release; revised release about six weeks after period end with Factory Orders)
Release Time:
8:30am Eastern Standard Time
Coverage:
Previous month
Released By:
U.S. Census Bureau
Latest Release:
http://www.census.gov/indicator/www/m3/adv/


Background
The Advance Report on Durable Goods Manufacturer's Shipments, Inventories and Orders, better known as the Durable Goods Report, provides data on new orders received from thousands of manufacturers of durable goods. These are generally defined as higher-priced capital goods orders with a useful life of at least three years, such as cars, semiconductor equipment and turbines. More than 85 industries are represented in the sample, which covers the entire United States.
Figures are provided in current dollars along with percentage changes from the prior month and the prior year for new orders, total shipments, total unfilled orders and inventories. Revisions are also included for the prior three months if they materially affect previously released results.
The data compiled for consumer durable goods is one of the 10 components of the Conference Board's U.S. Leading Index, as growth at this level has typically occurred in advance of general economic expansion.
What It Means for You
The headline figure will often leave out transportation and defense orders, as they can show higher volatility than the other components. In these industries, the ticket prices are sufficiently high that the sample error alone could swing the presented figure considerably.
Traders can play with the numbers here and look at things such as the rates of growth of inventories versus shipments; changes in the inventory/shipments ratio over time can point to either demand (falling ratio) or supply (rising ratio) imbalances in the economy to trade the U.S. dollar.
You should be cautious to see through the high levels of volatility found in areas of the Durable Goods Report. Month-to-month changes should be compared with year-over-year figures and year-to-date estimates, looking for the overall trends that tend to define the business cycle.
Strengths:
-Excellent industry breakdowns
-Data provided raw and with seasonal adjustments
-Provides forward-looking data such as inventory levels and new business, which count toward future earnings.
Weaknesses
-The survey sample does not carry a statistical standard deviation to measure error.
-Highly volatile; moving averages should be used to identify long-term trends.
Consumer Confidence Index


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RELATED TERMS
  1. Durable Goods Orders

    An economic indicator released monthly by the Bureau of Census ...
  2. Core Durable Goods Orders

    New orders for U.S. core durable goods, which are the total durable ...
  3. Factory Orders

    An economic indicator that reports the dollar level of new factory ...
  4. Durables

    A category of consumer goods, durables are products that do not ...
  5. Sampling Error

    A statistical error to which an analyst exposes a model simply ...
  6. Average Inventory

    A calculation comparing the value or number of a particular good ...
RELATED FAQS
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  3. How do you analyze inventory on the balance sheet?

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  4. What is the formula for calculating inventory turnover?

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  5. Does working capital include inventory?

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  6. How is the economic order quantity model used in inventory management?

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