DE: Manufacturers' Orders

Wed Dec 06 01:00:00 CST 2017

Consensus Actual Previous Revised
Month over Month -0.6% 0.5% 1.0% 1.2%
Year over Year 6.8% 9.5% 9.7%

Prospects for manufacturing output unexpectedly improved in October. A 0.5 percent monthly rise in orders followed a sharper revised 1.2 percent gain in September and means that new business has now expanded in five of the last six months. Annual unadjusted growth declined from 9.7 percent to 6.8 percent but this was simply due to a particularly large monthly increase a year ago.

The monthly headline print reflected a 0.9 percent increase in capital goods and a 0.6 percent advance in consumer and durable goods that was only partially offset by a 0.4 percent drop in basics. The domestic market grew 0.4 percent, its third consecutive rise, while overseas demand was up 0.5 percent (Eurozone minus 1.2 percent), its fourth straight increase.

October's report puts total orders in October a very healthy 2.6 percent above their average level in the third quarter when they rose 3.6 percent versus April-June. The solid uptrend suggests that growth of industrial production over coming months should impress.

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.