What It Measures
Durable goods orders measures new orders placed with domestic manufacturers for goods expected to last at least three years. Categories include:
- Transportation equipment (aircraft, vehicles)
- Primary metals
- Fabricated metal products
- Machinery
- Computers and electronics
- Electrical equipment
The data is highly volatile due to large aircraft orders.
Why It Matters
Business Investment Proxy: Durable goods orders, especially "core" (ex-transportation), indicate business capital spending plans.Leading Indicator: Orders today become production and employment tomorrow.Manufacturing Sector Health: Shows demand for U.S.-made goods.GDP Component: Feeds into the investment component of GDP.
How to Interpret
Core Orders: Exclude transportation (especially aircraft) for a cleaner signal of business investment.Non-Defense Capital Goods ex-Aircraft: The best proxy for business equipment spending.Volatility: Single-month readings can be misleading; focus on 3-month moving averages.