New orders for durable consumer goods in March increased 0.5%. Durable consumer goods are products designed to last at least three years. They include kitchen equipment, computers, and industrial machinery used in factories.
This is the 10th time that new orders have increased in the past 11 months.
Orders for durable consumer goods increased
Durable consumer goods orders suggest a bullish stock market
Ignoring the 2014 surge due to report changes, the data series hits record highs.
The trend in ordering durable goods reflects the trust of consumers and businesses. This is one of the few economic data reports that provides financial insights for both businesses and consumers.
New orders for durable consumer goods are one of the few indicators that combine consumer and corporate trust and are important leading economic indicators.
Consumers make big purchases when they are optimistic about the future. This is especially true for funding purchases. Financing shows confidence in the ability to make payments.
Pessimistic consumers delay purchases. Think of your family. If you are worried about losing your job, you probably avoid new debt. This idea applies to the larger economy. Millions of households behave that way.
These same factors also affect business decisions. Companies make large purchases when managers are optimistic and defer decisions when they are pessimistic.
This indicator also predicts stock market trends. Avoiding the stock market when new orders are less than six months ago defeats the buy-and-hold strategy.
The Department of Commerce began publishing this data in 1992. Since then, the sell signal has avoided all significant declines.
New orders for durable consumer goods indicate that the stock market may rise, although withdrawals may occur along the way.
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Durable Goods Have a Message for the Stock Market Source link Durable Goods Have a Message for the Stock Market