A leading indicator of business and investment confidence.
The short answer
- What are Durable Goods Orders (Durable Goods Orders)?
- Durable Goods Orders: orders for goods that last three years or more.
- When does Durable Goods Orders get it wrong?
- Aircraft and defense cause misleading jumps. Watch the core. Members can follow its live data on the macro map. Open the macro map →
Indicator limit
Aircraft and defense cause misleading jumps. Watch the core.
Read it with
Nonfarm payrolls: company confidence is believed once hiring follows.
Answers: how is the economy doing?
What it measures
Durable Goods Orders count new orders for goods expected to last three years or more: aircraft, machinery, cars and industrial equipment. Their value is that they are forward-looking: an order comes months before production and hiring, so it is an early window into company intentions.
Why transportation is excluded
Aircraft and heavy vehicles are ordered in huge, scattered deals. One airline order can turn the monthly number upside down while nothing changes in the economy. That is why the figure is read excluding transportation, which is the truer guide to the underlying trend.
The most valuable number: core capital goods
The deepest reading is non-defense capital goods orders excluding aircraft. It is a direct proxy for business investment: when companies order machines, they are betting their own money on coming demand. A sustained rise is one of the cleanest confidence signals, and a fall is an early warning of a slowdown that hasn't reached hiring yet.
Late to publish, early to signal
It comes out monthly with a delay and is often revised, so its month-to-month swings are large. Read the three-month average, not a single reading. Still, its place in the economic chain means it leads many indicators that are published before it.
Hypothetical example
Three straight months of falling core capital goods orders while hiring is still strong: companies stopped investing before they stopped hiring. Historically, a hiring slowdown follows this pattern by months.
What to read it with
Read it with purchasing managers' indexes for manufacturing, which lead it in mood. Read it with industrial production, which follows it in effect. And read it with the yield curve as part of the recession-warning basket.
Where to see it on the platform
The macro dashboard includes it in its read on the growth cycle, and the calendar schedules its monthly release.
