Durable goods are companies that produce products that are designed to last for a long time. Traditionally, anything that is designed to last for more than three years is considered a durable good.
The durables goods sector represents big ticket items. When consumers are purchasing these items, it usually indicates that they are confident with their financial situation. In a recession, consumers will cut back on the purchase of durable goods.
Durable goods purchased by consumers, may foreshadow an increase or a decrease in industrial production. Therefore, a rise in the profits of consumer durable sector stocks, is considered a positive leading indicator for the economy. A drop is considered a negative leading indicator.