DE: Manufacturers' Orders

Mon Jan 08 01:00:00 CST 2018

Consensus Actual Previous Revised
Month over Month 0.1% -0.4% 0.5% 0.7%
Year over Year 8.7% 6.8% 7.2%

Manufacturing orders were weaker than expected in November. Following a larger revised 0.7 percent monthly rise in October, orders declined 0.4 percent, their first setback since July. Even so, annual growth still climbed from 7.2 percent to 8.7 percent, the second highest reading in 2017.

The monthly headline contraction was wholly attributable to capital goods which were down 2.3 percent. By contrast, orders for intermediates gained 2.0 percent while consumer goods were up 3.2 percent. Regionally, weakness was roughly equally split between the domestic and overseas markets. The former fell 0.4 percent and the latter 0.5 percent despite a 0.7 percent gain in the rest of the Eurozone.

The November report puts average total orders in October/November a very healthy 2.7 percent above their mean level in the third quarter when they surged 3.7 percent versus the previous quarter. Accordingly, the trend in orders remains very robust and should be reflected in a more than respectable performance by the goods producing sector at the start of 2018.

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.