The Advance Report on Durable Goods Manufactures\u2019 Shipments, Inventories and Orders is a monthly report released by U.S. Census Bureau, part of which indicates dollar value of new orders of durable goods made by more than 4,000 manufacturers. These goods are expected to have a useful life of at least three years and higher prices. They include defense aircraft, automobiles, furniture, computer equipment and etc.<\/p>\n
Businesses are not doing that purchase so often. Once paying a huge amount of money, manufacturers are expecting a long useful life from these goods and showing confidence in the economy, otherwise they will held the decision until the economy is promising enough.<\/p>\n
The orders of durable goods placed by manufacturers can cause a chain of economic changes. Since the durable goods are often purchased to replace the old ones or as supplements, a higher efficiency and more supply can be expected. As supply produces it\u2019s own demand, consumer purchase usually rises while manufacturers providing more goods. Workers in the supply chain will have more working hours and lead to the change of non-farm payrolls. In a long run, when the supply-and-demand balance has been affected, it will further place an influence on inflation or deflation.<\/p>\n
Similarly, shipments of orders will increase the need for transportation businesses. In addition, the change of shipment\/inventory ratio will also affect the supply-and-demand balance.<\/p>\n
The index of durable goods orders has long been used as an important barometer of economy. As the graph below shows that the Durable Goods Orders are correlating to the changes happened to GDP.<\/p>\n