DE: Manufacturers' Orders

Tue Oct 06 01:00:00 CDT 2015

Consensus Actual Previous Revised
Month over Month 0.4% -1.8% -1.4% -2.2%
Year over Year 5.7% 2.2% -0.6% -1.5%

Manufacturing orders were weaker than expected in August. A 1.8 percent monthly fall followed a steeper revised 2.2 percent drop in July and constituted the first back-to-back decline since January/February. However, with orders down a particularly hefty 5.3 percent a year ago, annual growth still rebounded sharply to stand at 2.2 percent.

The monthly decrease was led by capital goods which were down fully 2.8 percent. However, weakness was broad-based as consumer and durable goods dropped 1.5 percent and basics were off 0.4 percent.

Regionally domestic orders contracted 2.6 percent after a 3.7 percent bounce at the start of the quarter and, ominously, have now declined in four of the last five months. Overseas demand fell 1.2 percent, compounding July's 6.1 percent slump and would have looked a lot worse but for the surprising robustness of the Eurozone component which posted a 2.5 percent gain following a 0.6 percent increase last time. Orders from the rest of the world fell 3.7 percent having already nosedived 10.1 percent in July.

August's setback means that average total orders in July/August were 2 percent below their mean level in the second quarter. The new manufacturing PMI pointed to solid growth of both output and orders in September but readings here have proved overly strong in recent months. Although early days yet, there are good reasons for supposing that the economic recovery has lost some momentum and hopes for a rebound this quarter are looking somewhat optimistic.

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.