Durable Goods

1. Durable Goods Tang Thong James Ngo Tam Nguyen

2. Durable Goods Orders • Published by: Bureau of the Census • Frequency: monthly • Period Covered: prior month • Volatility: moderate • Market significance: moderate to high • Web site: www.census.gov

3. What is it? • Key indicator of the future manufacturing • Durable goods include those manufactured items with a normal life expectancy of three years or longer. • An increase in the amount of durable goods orders may indicate an expansion in the economy and, if inflationary, the Federal Reserve could choose to tighten money by raising interest rates. • Economic indicator that measures new orders placed with domestic manufacturers for immediate and future delivery of factory hard-goods. • Levels of, and changes in, Durable Goods Orders are widely followed as an indicator of factory sector momentum.

4. What is it in the report? • Information about: • New orders • Shipments • Unfilled orders • Inventories

5. Why is it important? • Center-stage attention by the financial markets and the business community the moment it is released. • When a orders is a positive sign, they work to satisfy this demand from customer. • When a orders is a negative sign: they will have to shut down some plants, possibly lay off workers, or risk unwanted inventories. • Many economy sectors are tied to Durable Goods orders indictor: employment growth, industrial output, productivity, and profits.

6. Impact on Market

7. Keys to Interpreting the Data • The advance durable goods report is based on results obtained from 3,500 manufactures representing 89 industry categories. • A new order is considered if it comes with a legally binding agreement to purchase a product for immediate or future delivery. • All numbers are seasonally adjusted but annualized, nor are the dollars amounts adjusted for inflations. • For military equipments, the government relies on Defense Department data

8. Latest Release Durable Goods Orders: overview • New orders for manufactured goods in March, up four of the last five months, increased $11.9 billion or 3.1 percent to $400.2 billion. • This followed a 1.4 percent February increase. • Shipments, up following two consecutive monthly decreases, increased $5.9 billion or 1.5 percent to $392.9 billion. • This followed a 0.6 percent February decrease. • Unfilled orders, up twenty-two of the last twenty-three months, increased $12.9 billion or 1.8 percent to $717.3 billion. This was at the highest level since the series was first stated on a NAICS basis in 1992 and followed a 1.1 percent February increase. • The unfilled orders-to-shipments ratio was 4.92, up from 4.88 in February. • Inventories, up twelve of the last thirteen months, increased $1.0 billion or 0.2 percent to $484.0 billion. This followed a slight February increase. • The inventories-to-shipments ratio was 1.23, down from 1.25 in February.

9. Latest Release • Shipments Shipments of manufactured durable goods in March, up following two consecutive monthly decreases, increased $1.7 billion or 0.8 percent to $207.8 billion, unchanged from the previously published increase. This followed a 1.4 percent February decrease. Shipments of manufactured nondurable goods, up four of the last five months, increased $4.2 billion or 2.3 percent to $185.0 billion. This was led by petroleum and coal products, which increased $3.6 billion or 11.0 percent to $36.0 billion.

10. Latest Release • New Orders New orders for manufactured durable goods in March, up four of the last five months, increased $7.6 billion or 3.7 percent to $215.2 billion, revised from the previously published 3.4 percent increase. This followed a 2.3 percent February increase. New orders for manufactured nondurable goods increased $4.2 billion or 2.3 percent to $185.0 billion.

11. Latest Release • Unfilled Orders Unfilled orders for manufactured durable goods in March, up twenty-two of the last twenty-three months, increased $12.9 billion or 1.8 percent to $717.3 billion, unchanged from the previously published increase. This was at the highest level since the series began and followed a 1.1 percent February increase.

12. Latest Release • Inventories Inventories of manufactured durable goods in March, up thirteen consecutive months, increased $0.6 billion or 0.2 percent to $298.5 billion, revised from the previously published 0.3 percent increase. This followed a 0.1 percent February increase. Inventories of manufactured nondurable goods, up following three consecutive monthly decreases, increased $0.3 billion or 0.2 percent to $185.5 billion. This was due to petroleum and coal products, which increased $0.6 billion or 2.0 percent to $28.0 billion.

13. Latest Release • Inventories (continues) By stage of fabrication, March materials and supplies decreased 0.1 percent in durable goods and increased 0.1 percent in nondurable goods. Work in process increased 0.1 percent in durable goods and 0.3 percent in nondurable goods. Finished goods increased 0.6 percent in durable goods and 0.2 percent in nondurable goods.

14. Historical Data

15. Data Analysis Based on the information from this indicator, we conclude: The capital goods orders appear to be around the corner. Inflation pressure is unlikely, especially when the negative trend on core capital goods is possible . Concerns about economic growth are somewhat released by the increase in capital goods orders reflecting strong business investment spending in March.