DE: Manufacturers' Orders

February 6, 2017 01:00 CST

Consensus Actual Previous Revised
Month over Month 0.5% 5.2% -2.5% -3.6%
Year over Year 7.6% 3.3% 2.1%

Manufacturing orders rebounded surprisingly strongly in December. Following a sharper revised 3.6 percent fall in November, orders expanded fully 5.2 percent on the month, their largest increase since November 2010 and enough to lift annual growth from 2.1 percent to fully 7.6 percent.

Remarkably, the year-end surge was wholly attributable to capital goods where orders were up some 9.7 percent versus November when they slumped 6.8 percent. By contrast, basics declined 0.6 percent while consumer and durable goods were off 1.8 percent.

Geographically, the monthly advance was roughly evenly spread with the domestic market 7.9 percent higher and overseas demand 7.4 percent stronger. However, within the latter, orders from the rest of the Eurozone grew 10 percent while the rest of the world was only flat.

The December surge puts overall fourth quarter orders a very healthy 4.3 percent above their level in the third quarter when they dipped 0.3 percent. December represents something of a catch-up for the hard data as business surveys have been indicating a solid upward trend in new business for some time now. January is unlikely to have been anything like as robust but the year-end buoyancy should bode well for industrial production this quarter.

Manufacturers' orders are a leading indicator for industrial production. The figures are calculated every month by the Federal Statistical Office and represent the value of all orders for the delivery of self-made products confirmed by industrial enterprises with 50 or more employees in the respective reporting period. The results are broken down by both sector and region of origin (domestic and foreign split into euro area and non-euro area). Monthly volatility can be very high so moving averages give a much better guide to underlying trends.

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.