DE: Manufacturers' Orders

Mon Nov 06 01:00:00 CST 2017

Consensus Actual Previous Revised
Month over Month -1.1% 1.0% 3.6% 4.1%
Year over Year 9.5% 7.9% 8.5%

Prospects for German manufacturers unexpectedly improved still more in September. Orders rose 1.0 percent on the month and that after a sharper revised 4.1 percent jump in August. This means that new business has increased in four of the last five months and annual growth now stands at a heady 9.5 percent.

However, the domestic market was slightly softer at quarter-end, dipping a monthly 0.1 percent as falls in basics (5.0 percent) and consumer and durable goods (2.6 percent) just more than offset a rebound in capital goods (5.2 percent). By contrast, overseas demand expanded 1.7 percent as stronger capital goods (4.7 percent) proved enough of see off declines in basics (2.9 percent) and consumer and durables goods (3.1 percent).

September's report puts overall third quarter manufacturing orders some 3.6 percent above their level in the second quarter when they grew only 0.8 percent. For domestic orders alone, the rates were 3.1 percent and 1.0 percent respectively. This suggests that German industry is well set for a solid end to the year and factory goods output should make a significant contribution to fourth quarter real GDP growth.

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.