Durable Goods Orders

Durable goods orders reveal changes in production levels and provide a leading indication of manufacturing activity. Increased orders lead to increased production while declines are followed by  built-up  inventories and eventually, declining production. 

Weakness

• Durable Goods orders are extremely volatile and frequently revised because of the impact of defense and transportation sectors.  These sectors account for large dollar items ordered infrequently resulting in unexpected surges in the reported figures. Economists therefore exclude defense and transportation orders and primarily consider the three- to six-month moving average.

• Durables are difficult to predict. A strong report is viewed negatively by the bond market and may lead to inflationary pressures while a weak report is viewed positively by investors.