November Durable Goods

Many times an indicator tells the story of events that have already taken place.  Take Gross Domestic Product (GDP) for instance. It narrates what has happened during the three months before its initial release. By the time the final revision has been made, some of the data is 6 months old.  The Census Bureau’s Durable Goods Orders (DGO) is slightly different as this report provides a look at the past as well as a glimpse of things to come.

The report illustrates orders of items that will last for longer than three years.  These orders will need to be manufactured.  In the month of November, the core DGO increased by 2.4% for the month. This gives an indication of the health of business investment.  As businesses become more confident in the strength of the economy, they are more likely to invest in equipment.

Another part of the report looks at the number of previous orders that were not completed. These unfilled orders have grown in eleven out of the last twelve months.  These orders will need to be completed before the newest orders are started.  If this bottle necking continues, manufacturers will adjust by either increasing prices, investing even more in equipment, working employees for longer hours, or hiring new employees.  If one or a combination of the last three occurs, it will add to the current cycle upswing.  Overall, this indicator is providing evidence of an economy that has room to grow.