Economic Number – Factory Orders

Today’s morning economic report consisted of Factory Orders for the month of November. The consensus estimate was for a rise of 1.9% from October. The October Factory Orders report showed a drop of 0.4%. The number released at 9:00 am Central time with a rise of 1.8% which was a little below market expectations of 1.9%. Also, there was a revision to the October result with orders showing a drop of 0.2% versus the previously reported drop of 0.4%. Revisions in monthly economic numbers are common.

So what exactly is the Factory Orders number? 

The Factory Orders number is a combination of durable and non-durable goods that have been ordered from factories. The breakdown is about 50% durable and 50% non-durable goods. The number is compiled by the Department of Commerce and released on a monthly basis. Economic number watchers actually do not pay too much attention to this report. Non-durable goods are usually staples with consistent demand. The durable goods component is more volatile and gives more insight into the overall economy. There is a separate economic release, Durable Goods Orders, that provides better insight into this component of Factory Orders. 

So what does the number mean for Traders and Investors?

The Factor Order number is a good 50,000 level view as far as economic growth however it is one of the last numbers to come out showing activity in November.  Also, it is released the same week as the very important employment number which comes out this Friday and that is normally the focus of the markets the first week of each month.