Economic Indicator – Baseline Durable Goods Orders
If you trade on news and use such a tool as an economic calendar , then you have probably come across such an indicator of the American economy as “Basic orders for durable goods”.
Moreover, the economic calendar indicates that it is a fairly significant factor and can influence the US stock and foreign exchange markets.
Therefore, we will try to understand what this index is and how its changes affect financial markets.
Core Durable Goods Orders is an economic statistic that measures the change in total new orders received by U.S. manufacturers for durable goods, excluding transportation.
Core orders for durable goods are an important indicator for assessing the health of the US economy. They reflect the demand for durable goods, which is an indicator of business activity.
An increase in core orders for durable goods indicates an increase in business activity, while a decrease in them indicates a decrease in demand.
How are Core Durable Goods Orders calculated?
Base orders for durable goods are calculated by the U.S. Department of Commerce. To calculate the indicator, data on new orders received by American manufacturers from their customers is used. Data is collected monthly and published in the middle of the following month.
How does the indicator affect the dollar exchange rate?
The dollar exchange rate is a fairly important indicator. It affects the cost of imports and exports, as well as the cost of investments. Core orders for durable goods are a factor influencing the dollar.
Rising core orders for durable goods indicate increased business activity in the US. This could lead to increased demand for the dollar from foreign investors who want to invest in the American economy. As a result, the dollar exchange rate may rise.
A decline in core orders for durable goods indicates a decline in business activity in the United States. This leads to a decrease in demand for the dollar from foreign investors who want to invest in the American economy. As a result, the dollar exchange rate may decline.
Examples of the influence of the indicator on the dollar exchange rate
In 2022, core U.S. durable goods orders rose 1.7% year over year. This was due to an increase in demand for durable goods such as furniture, household appliances and computers, which led to an increase in the US dollar.
In 2023, core U.S. durable goods orders declined 5.1% year over year. This was due to a slowdown in the US economy and an increase in interest rates by the Federal Reserve. A decline in core orders for durable goods contributed to the weakening of the US dollar.
If we talk about the stock market, the impact of Core Durable Goods Orders on the value of securities is similar to that on the value of the American currency.
Core orders for durable goods are an important factor influencing the US stock market. Rising core orders for durable goods indicate increased business activity and stronger demand. This fact leads to increased profits for companies producing durable goods. As a result, the shares of these companies rise in price.
A decline in core orders for durable goods indicates a drop in demand. This could lead to a drop in the profits of companies producing goods in this segment. As a result, the shares of these companies may decline in value.
As a result, we can say that the growth of the Core Durable Goods Orders indicator is a positive factor for the American economy and has a positive effect on the US dollar exchange rate and the American stock market.