Forex Walkthrough

AAA

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


Related Articles
  1. Retirement

    Economic Indicators: Factory Orders Report

    By Ryan Barnes Release Date: First week of the month Release Time: 8:30am Eastern Standard Time Coverage: Two months ...
  2. Retirement

    Economic Indicators: Wholesale Trade Report

    By Ryan Barnes Release Date: On or around the 9th of the month Release Time: 10am Eastern Standard Time Coverage: Two ...
  3. Investing Basics

    Economic Indicators That Do-It-Yourself Investors Should Know

    Understanding these investing tools will put the market in your hands.
  4. Active Trading

    Leading Economic Indicators Predict Market Trends

    Leading indicators help investors to predict and react to where the market is headed.
  5. Retirement

    Economic Indicators: Existing Home Sales

    By Ryan Barnes Release Date: Fourth week of the month Release Time: 8:30am Eastern Standard Time Coverage: Previous month's ...
  6. Investing News

    Manufacturing Is Suffering, Consumers Don't Care

    The recent divergence between consumer sentiment and the manufacturing sector's health has continued, with a flurry of data releases Thursday highlighting this rift in the American economy.
  7. Fundamental Analysis

    Explaining Standard Error

    Standard error is a statistical term that measures the accuracy with which a sample represents a population.
  8. Retirement

    Economic Indicators: Productivity Report

    By Ryan Barnes Release Date: Approximately five weeks after previous quarter's end Release Time: 8:30am Eastern Standard Time ...
  9. Investing Basics

    How to Analyze a Company's Inventory

    Discover how to analyze a company's inventory by understanding different types of inventory and doing a quantitative and qualitative assessment of inventory.
  10. Retirement

    Economic Indicators: Housing Starts

    By Ryan Barnes Release Date: On or around the 17th of the month Release Time: 8:30am Eastern Standard Time Coverage: ...
RELATED TERMS
  1. Durable Goods Orders

    An economic indicator released monthly by the Bureau of Census ...
  2. Factory Orders

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

    A category of consumer goods, durables are products that do not ...
  4. Beginning Inventory - BI

    The book value of goods, inputs or materials available for use ...
  5. Business Inventories

    An economic figure that tracks the dollar amount of inventories ...
  6. Ending Inventory

    The value of goods available for sale at the end of the accounting ...
RELATED FAQS
  1. How do you analyze inventory on the balance sheet?

    Learn how to analyze inventory using financial statements and footnotes by doing ratio analysis and performing qualitative ... Read Answer >>
  2. What is the formula for calculating inventory turnover?

    Learn about the inventory turnover ratio, how it is calculated and what this efficiency metric tells businesses about their ... Read Answer >>
  3. How is the economic order quantity model used in inventory management?

    Understand what types of costs make up total inventory costs, and learn how the economic order quantity model is used to ... Read Answer >>
  4. Does working capital include inventory?

    Learn about inventory that is part of current assets and working capital, which is the difference between current assets ... Read Answer >>
  5. Why is it sometimes better to use an average inventory figure when calculating the ...

    For a couple of key reasons, average inventory can be a better and more accurate measure when calculating the inventory turnover ... Read Answer >>
  6. Why should investors care about the Days Sales of Inventory (DSI)?

    Learn about days sales of inventory and what it measures; understand why an investor would want to know a company's days ... Read Answer >>
Hot Definitions
  1. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  2. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  3. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  4. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  5. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  6. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
Trading Center