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How Consumer Goods Orders in September Impacted the Sector

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Manufacturers’ new orders for consumer goods and materials

The Conference Board Leading Economic Index (or LEI) uses new orders in consumer goods and materials as an important constituent of the LEI. Investors track the changes to the number of new orders since that acts as an indicator for future demand. Industrial production, wages, and the number of working hours increase in response to a rise in new orders, thus leading to an increase in a nation’s economic performance.

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Recent data release and impact on LEI

According to the September manufacturing new orders report, the number of manufacturers’ new orders for consumer goods and materials continued to increase in September. Reports say the number increased from a revised August reading of 136,388 to 136,528. In the Conference Board LEI, new orders for manufacturers have a weight of 8.2%. The net contribution of manufacturers’ new orders to the Consumer Board LEI for September stands at a net positive impact of 0.01, or 1.0%.

Performance of the sector

The top two traded ETFs in this sector include the SPDR Consumer Staples Select Sector ETF (XLP) and the Vanguard Consumer Staples ETF (VDC). Better-than-expected quarterly earnings from the constituent companies and a reduction in global uncertainties led to a strong performance for this sector in the previous month.

In the next part of this series, we’ll analyze how the ISM (Institute of Supply Management) New Orders Index has impacted the Conference Board Leading Economic Index.

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