DE: Manufacturers' Orders

Wed Sep 06 01:00:00 CDT 2017

Consensus Actual Previous Revised
Month over Month 0.3% -0.7% 1.0% 0.9%
Year over Year 4.9% 5.2% 5.1%

Manufacturing orders unexpectedly declined in July. A 0.7 percent monthly drop followed a marginally smaller revised 0.9 percent rise in June and was the first decrease since April. Annual growth decelerated from 5.1 percent to 4.9 percent.

July's weakness was broad-based but dominated by a 3.0 percent monthly slump in consumer and durable goods. Capital goods were down 0.7 percent while basics were off 0.4 percent. The domestic market (minus 1.6 percent) was wholly responsible for the headline deterioration as overseas demand (0.0 percent) just about kept its head above water despite a contraction in the rest of the Eurozone (1.0 percent). Annual growth of domestic orders misleadingly picked up sharply to some 7.2 percent due to an even steeper slide a year ago.

Today's data put overall orders in July just 0.3 percent above their average level in the second quarter when they climbed 0.8 percent. However, business surveys remain very optimistic and August's manufacturing PMI report found orders rising at the third fastest pace since April 2011. The monthly figures are very erratic and the likelihood is that the underlying trend is still reassuringly robust.

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.