DE: Manufacturers' Orders

Thu Mar 05 01:00:00 CST 2015

Consensus Actual Previous Revised
Month over Month -1.2% -3.9% 4.2% 4.4%
Year over Year 2.6% -0.3% 3.4% 4.0%

Manufacturing orders were disappointingly weak in January. Following a slightly larger revised 4.4 percent surge in December orders slumped 3.9 percent on the month, their worst performance since August last year. Compared with a year ago, seasonally and workday adjusted growth dropped from 4.0 percent to minus 0.3 percent.

January's monthly headline decline encompassed broad-based reversals amongst the major sectors. Thus, basics were down 3.8 percent, capital goods 4.2 percent and consumer and durables 0.6 percent.

Both the domestic market (2.5 percent) and overseas demand (4.8 percent) contracted. Within the latter, orders from the other Eurozone members followed December's 4.6 percent spurt with 9.0 percent nosedive as capital goods dropped some 14.2 percent. Demand from elsewhere in the world declined 2.2 percent.

The roller-coaster monthly profile to overall orders always tends to cloud their underlying trend. However, recent developments suggest that manufacturing has stuttered since the middle of last year. Although over the latest three months they still show a respectable 1.6 percent increase, in January alone they stood 1.8 percent below their fourth quarter average.

In any event, manufacturing looks to be lagging well behind services and on current trends is unlikely to provide much support to first quarter real GDP growth.

Manufacturers' orders measure new orders placed for manufactured goods, both domestic and foreign.

Manufacturers' orders data are keenly awaited by analysts each month. The data present a detailed breakdown by various sectors and a reading of the pulse of a major sector of the economy. Like the PPI, manufacturing orders data exclude construction, which is the preferred Eurostat measure.

The manufacturers' orders data rank among the most important early indicators for monitoring and analyzing German economic wellbeing. Because these data are available for both foreign and domestic orders they are a good indication of the relative strength of the domestic and export economies. The results are compiled each month in the form of value indexes to measure the nominal development of demand and in the form of volume indexes to illustrate the price-adjusted development of demand. Unlike in the U.S., orders data are not collected for all manufacturing classifications - but only those parts in which the make-to-order production plays a prominent role. Not included are, for example, mining, quarrying and the food industry.