DE: Manufacturers' Orders

Fri Oct 06 01:00:00 CDT 2017

Consensus Actual Previous Revised
Month over Month 0.9% 3.6% -0.7% -0.4%
Year over Year 4.8% 7.9% 4.9% 5.2%

After a disappointing start to the third quarter, manufacturing orders took off in August. July's monthly fall was also shaded a few ticks to 0.4 percent but this was swamped by a 3.6 percent August surge, the best performance since last December. Annual growth jumped from 5.9 percent to 7.9 percent, similarly its strongest reading so far this year.

August's impressive gain was led by overseas demand which climbed fully 4.3 percent on the month after a 0.3 percent rise last time. However, orders from the rest of the Eurozone fell 1.0 percent, compounding a 0.2 percent dip in July and leaving the rest of the world (7.7 percent after 0.6 percent) to do all the work.

Importantly, the domestic market (2.7 percent after minus 1.4 percent) also had a good month, and that despite a 1.3 percent drop in capital goods. Basics (6.6 percent) were especially robust and consumer and durable goods (5.9 percent) were not far behind.

While the composition could have been better, the August data have provided a useful boost to an already decent upward trend in manufacturing orders. Average orders in July/August were a healthy 2.4 percent above their level in the second quarter when they advanced a more modest quarterly 0.8 percent. This should help to ensure a solid near-term outlook for industrial production.

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.