Jul 08, 2013 | by Franck Cushner, CFP®
Each month the U.S. Census Bureau releases data on new orders for durable goods, which are defined as items that have a useful life of three or more years. Orders for these longer-term goods are considered a measure of economic growth by economists. This is so, because the cost of these goods are usually much greater than the cost of consumable goods, such as toothpaste and food. Individuals and large companies alike must decide and commit to larger costs associated with durable goods, thus only making such purchases under confident and growth oriented conditions.
May data, the most recent data released, showed an increase in new orders for durable goods of 2.1% from the previous year. Capital equipment, such as machinery, saw an increase of 4.0% from last year. Interestingly enough, there was over a 6% drop in new orders for computers, yet an increase of 7.5% in new orders for communications equipment such as cell phones.
Automobile orders saw a significant increase of over 10% from May of last year. Positively, with companies spending on machinery and consumers spending on cars, the economy continues to show steady signs of growth.
Sources: U.S. Census Bureau
Related Chart: Durable Goods Orders
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