Durable Goods Orders measures the change of US manufactured durable goods, where durable refers to a long lasting period. These items can last at least 3 years or more, such as machinery or equipment. This measure includes also the transportation items and it is released on a monthly frequency by the Census Bureau. Higher readings for Durable Goods Orders are positive both for the US economy and the US Dollar, as they show strong manufacturing activity. Any loss of momentum of weak trend in the Durable Goods Orders can lead to lower GDP growth. They are also a very important leading indicator for the economy, as higher changes show bigger confidence and optimism for the GDP growth. They are also reported without the defense and transportation orders, as it is possible in any given month the defense and transportation orders to distort the results due to their nature being expensive items.
The United States Durable Goods Orders
The United States Durable Goods Orders latest reading was -1.1%, reported in June of 2017 but their reference was for May of 2017, which was worse than the forecast of -0.6% and the previous reading of -0.9%. Historically the United States Durable Goods Orders had their all-time high reading of 22.10% in July of 2014. In August of 2014 there was also the all-time low price of -17.90%. The long-term average for the years of 1992-2017 is positive at 0.31%.
Why is it important?
Core Durable Goods Orders provide investors with an insight into general economic conditions in the United States. Moreover, using this indicator it is possible to predict future performance of the manufacturing sector of the national economy.
Practical application
A higher than expected reading should be taken as bullish for the USD, while a lower than expected reading should be taken as bearish for the USD.
