A fundamental economic indicator that measures the strength of manufacturing.
New Durable Goods Order measures the strength of manufacturing. Durable goods are designed to last three or more years including airplanes, machine parts for factories, cars and buses, cranes, appliances, etc. The number of new orders is a gauge to manufacturing strength because these are the first type of goods to be effected by economic shift. Consumers need to be very optimistic to purchase a car compared to daily necessities such as clothes. Therefore they can also hold off these goods first in economic downturns.
In the US, the Conference Board attempts to take into account inflation when measuring. New Durable Goods Orders data uses price indexes constructed from various sources at the industry level and a chain-weighted aggregate price index formula to try and “deflate” the results.
