1. Economic Indicators: Introduction
  2. Economic Indicators: Beige Book
  3. Economic Indicators: Business Outlook Survey
  4. Economic Indicators: Consumer Confidence Index (CCI)
  5. Economic Indicators: Consumer Credit Report
  6. Economic Indicators: Consumer Price Index (CPI)
  7. Economic Indicators: Durable Goods Report
  8. Economic Indicators: Employee Cost Index (ECI)
  9. Economic Indicators: Employee Situation Report
  10. Economic Indicators: Existing Home Sales
  11. Economic Indicators: Factory Orders Report
  12. Economic Indicators: Gross Domestic Product (GDP)
  13. Economic Indicators: Housing Starts
  14. Economic Indicators: Industrial Production
  15. Economic Indicators: Jobless Claims Report
  16. Economic Indicators: Money Supply
  17. Economic Indicators: Mutual Fund Flows
  18. Economic Indicators: Non-Manufacturing Report
  19. Economic Indicators: Personal Income and Outlays
  20. Economic Indicators: Producer Price Index (PPI)
  21. Economic Indicators: Productivity Report
  22. Economic Indicators: Purchasing Managers Index (PMI)
  23. Economic Indicators: Retail Sales Report
  24. Economic Indicators: Trade Balance Report
  25. Economic Indicators: Wholesale Trade Report

“The Advance Report on Durable Goods Manufacturer's Shipments, Inventories and Orders,” or the Durable Goods Report, provides data on new orders received from more than 4,000 manufacturers of durable goods, which are generally defined as higher-priced capital goods orders with a useful life of three years or more, such as cars, semiconductor equipment and turbines. More than 85 industries are represented in the sample, which covers the entire United States. The report is issued monthly by the Census Bureau of the U.S. Department of Commerce.

 

Why the Durable Goods Report is important

Orders for durable goods are an important leading economic indicator. Businesses and consumers generally place orders for durable goods when they are confident the economy is improving. A durable goods report showing an increase in orders is a sign that the economy is trending upwards. This can be a sign of gains in the stock market.

Durable goods orders tell investors what to expect from the manufacturing sector, a major component of the economy.

Capital goods take longer on average to manufacture than cyclical goods, new orders are often used by investors to gauge the potential for sales and earnings increases by the companies who make them.

The Durable Goods Report gives more insight into the supply chain than most indicators, and can be especially useful in helping investors get a feel for earnings potential in the most represented industries: machinery, technology manufacturing and transportation.

A weak durable goods report will generally lead to a decline on the bond market.

As a cautionary note, the data can be volatile and revisions following the issuance of the report are not uncommon. Investors and analysts are wise to use several month’s averages instead of relying too heavily on a single month’s worth of data.

 

Strengths of the Durable Goods Report:

  •          Provides good industry breakdowns
  •          Data is provided both raw and with seasonal adjustments
  •          Provides forward-looking data such as inventory levels and new business, which count toward future earnings.

 

Weaknesses of the Durable Goods Report:

  •          The data can be highly volatile; moving averages should be used to identify long-term trends.
 

 

 

 

 


Economic Indicators: Employee Cost Index (ECI)
Related Articles
  1. Investing

    Global Consumer Durables: Exploring Revenue Trends and Fundamentals

    Examine geographic revenue data from the consumer durables sector to identify catalysts and trends.
  2. Investing

    Can Whirlpool Remain Durable?

    Tariffs and concerns around Friday's durable goods report could create headwinds for Whirlpool (WHR).
  3. Investing

    CPI, Beige Book and Other Economic Indicators That Do-It-Yourself Investors Should Know

    Understanding these investing tools will put the market in your hands.
  4. Personal Finance

    2 Reasons Why the Stock Market Leads the Economy

    Pay attention to how economic strength can follow a sustained stock market advance and how economic weakness can result from a stock market slump.
  5. Insights

    What Are the Top U.S. Imports?

    Take a closer look at the United States' top imports.
  6. Investing

    Liberum: Early-Cycle Industrials to Outperform

    Liberum: Industrial production showing healthy signs of recovery as the gap widens between new orders and inventories
  7. Insights

    Fed Watching Basketball-style: Point-Spreads or Teamwork?

    Investors who are also passionate about basketball as a sport want to know how Fed “Coach” Powell and team will make decisions. Team skill and style are more important than a single shot.
  8. Investing

    How to make a winning long-term stock pick

    Discover the key elements of making a winning stock pick and a good long-term investment using fundamental and economic data analysis.
Frequently Asked Questions
  1. What Licenses Do Financial Advisors Need to Have?

    Understand why all financial advisors are required to be licensed, and identify the specific licenses that must be obtained ...
  2. When Is Managerial Accounting Appropriate?

    Understand the difference between managerial accounting and financial accounting. Learn common scenarios in which managerial ...
  3. Do ETFs Generate Capital Gains for Shareholders?

    Learn how exchange-traded funds (ETFs) can generate taxable capital gains for shareholders due to occasional and substantial ...
  4. Why is there a negative correlation between quantity demanded and price?

    Learn what the law of demand is, the basic assumption of the law of demand and why there is a negative correlation between ...
Trading Center