The US Census Bureau announced on Thursday, September 26, that Core durable goods, excluding transportation equipment, rose 0.5% from last month, beating expectations of +0.1%, in addition to revising the previous figure from -0.2% to -0.1%. On the new order front, orders for manufactured durable goods remained almost flat month-on-month at $289.7 billion in August, better than expectations of a -2.8% decline, but well below July’s +9.9% increase (revised from +9.8). %).
Electrical equipment, appliances and components contributed to this slight increase, rising 1.9% to $14.4 billion. Total durable goods orders in July were $289.6 billion. However, durable goods, excluding defense, saw a decline of 0.2% from the previous month, compared to a significant rise of 10.3% in July.
Non-defense orders, excluding aircraft, increased by 0.2%, up from the previous result of 0.0%. Additionally, the previous figure underwent a revision from -0.2% to -0.1%. After two consecutive monthly rises, shipments of manufactured durable goods fell 0.5 percent to $289.4 billion, following a 1.1 percent increase in July.
The statistics bureau noted that incomplete applications, which saw a rise in 48 of the last 49 months, increased 0.4 percent to $1,391.4 billion, following a 0.2 percent rise in July. Transportation equipment, which increased in 43 of the last 44 months, led the increase, rising 0.5 percent to $896.5 billion. Inventories, which recorded an increase in four of the last five months, rose 0.1 percent to $529.8 billion, following a similar increase in the previous month.
The report can also affect consumer sentiment, as strong business investment is usually associated with job creation and wage growth, reinforcing a positive economic outlook.
The Importance of Essential Durable Goods Orders Report
The Basic Durable Goods Orders in US dollars is an important economic indicator that measures new orders placed to durable goods manufacturers, excluding transportation goods (such as cars and aircraft). The following is a detailed overview:
Main characteristics
Monthly Edition:
The report is released monthly by the US Census Bureau, usually at the end of the month for the previous month’s data.
Definition of durable goods:
Durable goods are goods that are expected to last for three years or more, including appliances, machinery, and electronics. The basic metric excludes transportation-related requests to provide a clearer picture of the underlying demand.
Economic Index:
Business Investment Overview: Basic durable goods orders are a key indicator of business investment. The increases suggest that companies are confident in future economic conditions, leading to more investment in equipment and infrastructure.
Ingredients:
- The report illustrates different categories of durable goods, such as:
- Machines
- Computers & Electronics
- Electrical equipment
- Furniture
- Devices
Market Impact:
- Stock markets: Higher demands can boost investor confidence in economic growth, often leading to stock market gains, especially in sectors related to manufacturing and industries.
- Bond markets: Strong orders for durable goods can lead to expectations of economic growth and potential inflation, affecting bond yields and prices.
- Currency Markets: Positive data can strengthen the US dollar because it reflects economic health and attracts foreign investment.
Consumer Sentiment:
The report also affects consumer sentiment because strong business investment typically leads to job creation and wage growth, reinforcing a positive economic outlook.
The USD Core Durable Goods Orders report is a critical indicator of economic health, providing insights into business investment trends and consumer demand. It plays an important role in shaping market expectations and is closely monitored by economists, investors and policymakers.
The Impact of US Durable Goods Orders on Global Markets
When comparing the US M/M report with similar economic indicators from other countries, its impact on the US dollar and global markets is very noticeable. Let’s examine the global perspective and how it compares to similar indicators in other major economies:
1. Importance compared to other countries
US Staple Durable Goods Orders are a key economic indicator for the United States, the world’s largest economy. The United States has a global influence due to the central role of the US dollar as a global reserve currency. Therefore, changes in US durable goods data can have a wide-ranging impact on global markets.
By contrast, many other countries do not have a direct equivalent index with the same level of impact. For example:
Germany releases data on factory orders that provide insights into manufacturing demand in Europe’s largest economy. However, its global impact is more regional for the eurozone area and global trading partners.
2. Global Market Reactions
Core durable goods orders in the United States tend to have a stronger global market reaction than similar reports from other economies because the United States is not only a huge importer, but also a major global driver of consumer demand and commercial investment.
For example, an unexpectedly strong US Core Durable Goods Orders report could boost optimism about global economic growth and lead to higher risk appetite globally. This could strengthen the US dollar and lift global stock markets, especially in regions closely linked to US trade such as Canada, Mexico, and Asia.
3. Influence on monetary policy
In the US, strong durable goods order data could affect the Fed’s monetary policy, potentially leading to changes in interest rates. Since US monetary policy is closely monitored globally, such data can significantly impact global capital flows.
