DE: Manufacturers' Orders

Wed Apr 08 01:00:00 CDT 2015

Consensus Actual Previous Revised
Month over Month 2.0% -0.9% -3.9% -2.6%
Year over Year 0.8% -1.2% -0.3% -0.4%

Manufacturing orders were unexpectedly soft in February. Although January's hefty drop was pared to a more modest 2.6 percent, orders defied positive market forecasts by falling a further 0.9 percent on the month in mid-quarter. This was their first back-to-back decline since May/June last year and saw seasonally and workday adjusted growth ease from minus 0.4 percent to minus 1.2 percent, its worst performance since June 2014.

Weakness was concentrated in basics and capital goods which recorded monthly decreases of 1.2 percent and 1.1 percent respectively. Consumer and durables rose fully 2.9 percent.

The domestic market recorded no overall change versus January leaving a 1.6 percent drop in overseas demand wholly responsible for the fall in headline orders. Within this, the rest of the Eurozone shrank 2.1 percent while non-Eurozone orders were off 1.3 percent.

February's setback means that average orders in the first two months of last quarter were 1.6 percent below their second quarter mean. This is in marked contrast to the improving trend suggested by the manufacturing PMI surveys and so may be revised stronger in due course. However, as they stand these latest figures on pipeline demand warn that the near-term outlook for industrial production may not be quite as rosy as previously thought. They also probably make for some downside risk to tomorrow's report on output in February.

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.