What Are Durable Goods Orders?
A key indicator of future manufacturing activity. This government index measures the dollar volume of orders, shipments, and unfilled orders of durable goods. Durable goods are new or used items generally with an average life expectancy of three years or more.
Understanding Durable Goods Orders
Durable goods orders reflect new orders placed with domestic manufacturers to deliver long-lasting manufactured goods (durable goods) in the near term or future. The change in the total value of new orders is measured and shared with the public in two releases per month: the advance report on durable goods and the manufacturers' shipments, inventories, and orders.
Durable goods are expensive items that last three years or more. As a result, companies purchase them infrequently. Examples include machinery and equipment, such as computer equipment, industrial machinery, and raw steel, as well as more expensive items, such as steam shovels, tanks, and airplanes—commercial planes make up a significant component of durable goods for the U.S. economy.
If a large order for some items comes through one month, it can skew the month-to-month results. For that reason, many analysts will look at durable goods orders, excluding the defense and transportation sectors.