Orders for durable goods are considered what type of economic indicator?

Orders for durable goods are considered a leading indicator because they provide insight into future economic activity. When businesses place orders for durable goods, such as machinery, equipment, and vehicles, it signifies their confidence in future consumer demand and economic growth. An increase in these orders suggests that businesses are anticipating higher sales and may be preparing to invest in expansion or production capabilities. This anticipation typically occurs before the economy shows measurable growth, making durable goods orders a valuable predictor of future economic performance.

This relationship stems from the fact that durable goods orders often precede changes in overall economic conditions. As businesses invest in the goods needed for production or service delivery, it usually leads to increases in employment, production levels, and ultimately consumption. Hence, tracking durable goods orders allows economists and investors to gauge where the economy might be heading in the near future.