The Durable Goods Report is produced monthly by the Census Bureau and provides data based on a survey of about 4,000 manufacturers of durable goods. These are products that are considered capital goods with a life of at least 3 years. The major components tend to be aircraft, computer equipment and automobiles. Generally, the durable goods figures are highly volatile and reflect large purchases such as automotive fleets, aircraft orders and defense projects. The report does provide some guidance on overall business demand – particularly business investment – but is not one of the most valuable economic indicators produced by Census.
Durable Goods orders rose by about 3.3 percent in April, following a 5.9 percent decrease in March. Transportation equipment led the increase, $5.1 billion or 8.1 percent to $67.6 billion, in large part due to increases in orders of nondefense aircraft and parts. Interestingly, across nearly all industry category, shipments in April were down, while orders rose, with only computing equipment seeing a decline in both. Such a broad increase could be seen as a positive sign for the economy; however, this indicator is highly volatile and most categories experienced decreases in orders in March.
Durable goods inventories and unfilled orders were flat during the past three months, indicating that manufacturers are biding their time in ramping up production, but rather are managing operations to reflect shorter term patterns of orders.
The Durable Goods report is extremely variable, and there is no indication of an upward – or for that matter a downward – trend. Defense orders were up sharply in April, possibly as a result of sequester, but across most industry categories, orders, shipments, and inventories are not showing any exciting shifts. This is consistent with an economy that is suffering from a lack of investment incentives, and indicates continued slow and steady growth in the coming months.