Understanding Durable Goods Numbers


 
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by S. Wade Hansen

Durable Goods: A Glimpse Into Consumer Willingness to Buy

Once a month, the U.S. Census Bureau gives us a glimpse into what the future demand for big ticket items is going to be by releasing its Durable Goods numbers. Traders love this information because consumers only buy durable goods when they are confident in the economy and in their ability to pay for the big-ticket items. Trading the Durable Goods Number

The more durable goods consumers are purchasing, the stronger the economy is and the higher stock prices will typically go.

The fewer durable goods consumers are purchasing, the weaker the economy is and the lower stock prices will typically go.

Of course, there are certainly other factors you should be looking at when determining consumer demand so Don't Read the News in a Vacuum.

 
   
 
What is the Durable Goods Number?

 The Durable Goods number reports the amount of purchase orders placed with manufacturers for durable goods. Durable goods are hard products—such as automobiles, computers and appliances—with a life expectancy of more than three years.

You can see the most recent Durable Goods report here.

Appliance Stocks to Watch

The Durable Goods number is especially important for shareholders in the nations largest appliance companies. When you see the Durable Goods number rising, it is a good sign for appliance companies and will typically have a positive impact on the price of their stocks. When you see the Durable Goods number falling, it is a bad sign for appliance companies and will typically have a negative impact on the price of their stocks.

Here are a few of the appliance companies you should keep an eye on:

- Whirlpool Corporation (NYSE: WHR)

- The Black & Decker Corporation (NYSE: BDK)

- Snap-on Incorporated (NYSE: SNA)

- Pentair, Inc. (NYSE: PNR)

Comments Add New
franklin adelaide  - Mr   |2009-01-29 03:04:04
Insightful. At least I know what Durable goods mean now. Question though. Why is
bad news in USA economy bad for Britain. Bad data report,GBPUSD falls.Why.
John Jagerson  - good news / bad news   |2009-01-29 03:08:55
First, what is bad for US economy is typically bad for the world. Sounds biased
but it is unfortunately true. Second, bad news drives demand for the USD as the
worlds reserve currency. Lately even bad news about the US economy has been good
news for the USD (from a demand perspective). So it is not so much that the
durable goods orders is good or bad for the pound as much as it is good or bad
for the USD.
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