Durable Goods Number

The Durable Goods number is  a measure of the change in total value of new purchase orders placed with manufacturers for durable goods, excluding transportation items.  This begs the question, what is a durable good?  Well a durable good is a good that does not quickly wear out or one that yields services or utility over time rather than being consumed.  Examples are appliances, autos, electronics, housewears, sporting goods and such.  So durable goods span a wide range of products.  The number is announced about the 26 days into the next month at 8:30 am.  So what does the Durable Goods number tell us, well it is touted as a leading indicator of production.  A rising number means that manufacturers will need to increase production to fill orders.  The number reflects the previous month.  Forecast was set for a 0.6% number, but came in at a shocking -3.8% number.  To put this number into perspective for you I will provide the following graph.

What impact did this have on the stock market?  Well as I believe a picture is worth a thousand words, here it is:

Notice the the 80 to 90 point drop after the announcement on higher volume.  The reaction toned down as it usually does and brought the market back up.  It will be interesting to see how we close today.  Considering this data and the data provided at the bottom of this blog, I would say our economy is not as strong as being reported.