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Factory Orders

By:

Crown Forex

2008-04-02

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Previous: 2.5%

Forecast: 2.4%

Definition
Factory Order index measures the quantity of the raw materials that are required and recommended by factories during produce goods and products operation. Usually calculated by using two indexes, the durable goods and non durable goods, and issued monthly by US Ministry of Trade.

This indicator reflect the percentage change quantity of consumers demand of durable and non durable goods that produced by different factories.

General Effect
In the case the factory orders index shows an increase in factory orders quantity that means increasing raw materials quantity that are needed by factories to complete and activate production operations in target to increase the produced quantity of durable and non durable goods. Accordingly factories will be able to accommodate increasing consumers' demand for goods and products which is moved by changes on their economic conditions such as income level, consumption and expenditures, then as a result factories production capacity will enhance and affect the entire economic circle positively leading to accelerated growth and strengthening the local currency.

Factory orders has an effect on the currencies market significantly because it does reflect the production capacity for the entire economy, so the importance level for this indicator is considered moderate.

In respect of factory orders effect on the stock market in most cases it doesn't leave any obvious effect at stock indices, so if the factory orders percentage change rise it will leave a positive impact on industrial companies shares which affect the whole stock market positively, but it will be balanced with increasing consumers demand on different goods and products as an out come of changes in consumers directions to spend more money and increasing consumption levels instead of investing that amount of money in the stock market.

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CROWN FOREX SA, located at St-Hubert 38, 2854 Bassecourt, P.o.box 247, Switzerland, is fully regulated as a financial intermediary under Swiss federal law on the prevention of money laundering (LBA, MLA). Our company is also affiliated with the ARIF association, thus overseen by the Swiss federal ...

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