Durable Goods Orders Source: Department of Commerce Frequency: Monthly Availability: Three to four weeks following the reported month Possible Impact on Interest Rates: Larger-than-expected monthly increase or increasing trend is considered inflationary, causing bond prices to drop and yields and interest rates to rise.
Current Data Reported April 26, 2000: Durable orders rose 2.6% in March, following a combined decline of 3.9% for January and February. A near 10% surge in electronics contributed to March's increase, while a 31% decline in defense orders held the overall reading down (ex-defense orders rose 3.7%). Transportation came in weaker than expected, up 1.8% for the month after a decline of 9.7% in February. Unfilled orders moved higher last month, suggesting continued production strength in April. See "Overview" below for more information. Overview: Durable goods orders are a leading indicator of manufacturing activity. Increases in orders leads to increases in production. Drops in orders are followed by a build-up of inventories and, eventually, a decline in production. Economists use durable goods data to forecast changes in manufacturing. This report has two main weaknesses--the data is extremely volatile and is frequently revised following its release. The volatility is due to the defense and transportation sectors, which account for large dollar items that are ordered on an irregular basis, causing unexpected surges in the monthly figures. Economists typically use the data by excluding defense and transportation orders and analyzing the three- to six-month moving average. Durables are hard to predict. A strong report is bad news for the bond market, causing the bond to slump. Likewise, a weak report is viewed positively by investors.
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