DE: Manufacturers' Orders

Thu May 07 01:00:00 CDT 2015

Consensus Actual Previous
Month over Month 1.0% 0.9% -0.9%
Year over Year 1.6% 1.9% -1.2%

Manufacturing orders followed an unrevised 0.9 percent monthly drop in February with a 0.9 percent rise in March. The end of quarter gain, which was fractionally less than expected, boosted annual workday adjusted orders growth from minus 1.2 percent to 1.9 percent, its highest mark so far in 2015.

The monthly increase in overall orders was largely attributable to capital goods which were up 1.3 percent. However, basics also saw a respectable 0.9 percent advance leaving consumer and durables (minus 2.2 percent) as the only sector to record a decline.

In fact domestic demand was strong as orders generated from the home market expanded a very solid 4.3 percent versus mid-quarter when they edged up 0.1 percent. Within this, capital goods again dominated with a jump of 5.8 percent. However, foreign orders were soft, falling 1.6 percent on the month on the back of broadly equivalent decreases in all three main sectors. The fall here was not due to weakness in the Eurozone, where orders climbed 2.5 percent, but rather to a 4.0 percent drop elsewhere.

Having begun the year with a 2.7 percent monthly slide, the March recovery was nothing like strong enough to ensure positive growth in total orders last quarter. In fact a 1.5 percent contraction was more than sufficient to reverse the fourth quarter's 1.4 percent increase and leaves something of a red flag hanging over second quarter GDP. That said, business surveys remain relatively optimistic and even if the economy is not picking up momentum quite as quickly as expected just a few months ago, at least underlying trends appear to be moving in the right direction.

Nonetheless, there is certainly nothing here to justify any talk of possible ECB tapering.

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.