Factory orders definition
Factory orders
Factory orders are a common economic indicator, used to assess the dollar value of goods from factories. The data for factory orders are released in monthly reports by the US Census Bureau, and are split into two major groupings: durable and non-durable goods. Each factory orders report includes new orders, unfilled order, shipments and inventories.
Why do factory orders matter?
Factory orders matter because the information provided about durable and non-durable goods helps investors monitor growth trends and the overall health of the economy. At a macro level, if the level of factory orders is rising, then the economy is likely growing as consumers demand more goods and services. At an individual stock level, businesses will be benefiting from this increase.
For example, a rise in demand for electric cars would have a positive effect on the share price of EV producers, and the effects would also trickle down into other ‘green’ businesses, such as companies mining lithium.