Variant of NAICS 2002 - Durable and Non-Durable Goods Manufacturing Industries

Additional information

The durable manufacturing industries comprise the more cyclically-sensitive portion of the manufacturing sector. As a result of this sensitivity, new orders for the goods produced by these industries are used in the construction of Statistics Canada's leading economic indicator. The identification of the specific subsectors comprising the durable and non-durable groups reflects the conventional treatment that has emerged over time.

That the demand for durable goods is cyclically sensitive is a reflection of the nature of such goods. According to Section 9.38 of System of National Accounts 1993 (jointly published by the Commission of European Communities - Eurostat, the International Monetary Fund, the Organisation for Economic Cooperation and Development, the United Nations, and the World Bank), the distinction between durable and non-durable goods is their reusability over an extended period of time:

In the case of goods, the distinction between acquisition and use is analytically important. It underlies the distinction between durable and non-durable goods extensively used in economic analysis. In fact, the distinction between durable and non-durable goods is not based on physical durability as such. Instead, the distinction is based on whether the goods can be used once only for purposes of production or consumption or whether they can be used repeatably, or continuously. For example, coal is a highly durable good in a physical sense, but it can be burnt only once. A durable good is therefore defined as one which may be used repeatably or continuously over a period of more than one year, assuming a normal or average rate of physical usage. A consumer durable is a good that may be used for purposes of consumption repeatedly or continuously over a period of a year or more.

A qualifier that is sometimes added with respect to this "one year" criterion is that the goods in question must also retain a considerable part of their original value after the one year time period. Clothing, for example, although generally reusable for more than one year, retains very little of its resale value after that time, and, hence, is treated as non-durable.

As a result of the reusability described above, the purchase of replacement durables is subject to postponement. Decisions to put off the purchase of such goods may be the cause or effect—or both—of a downturn in the business cycle, hence the link between the role of durable manufacturing industries as leading indicator and the underlying conceptual basis for distinguishing between durable and non-durable goods.

The U.S. (Bureau of the Census, Bureau of Economic Analysis, Bureau of Labour Statistics) publish durable/non-durable breakdowns and use the same definition (or its 1987 SIC-based equivalent).

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