DE: Manufacturers' Orders

Tue Feb 06 01:00:00 CST 2018

Consensus Actual Previous Revised
Month over Month 0.8% 3.8% -0.4% -0.1%
Year over Year 3.3% 6.8% 8.7% 9.1%

Manufacturing orders rebounded much more sharply than expected in December. Following a smaller revised 0.1 percent monthly dip in November, orders jumped fully 3.8 percent, their second strongest increase since July 2014. Annual growth was 6.8 percent, a healthy enough result but still well short of November's 9.1 percent post due to a 6 percent monthly surge in orders in December 2016.

The year-end spurt was built upon capital goods orders which were up 5.7 percent versus mid-quarter. Intermediates (2.4 percent) also fared well but consumer goods (minus 5.1 percent) had a poor month albeit after a solid November (2.8 percent). Regionally, the monthly headline gain mainly reflected the robustness of overseas demand which climbed some 5.9 percent, led by an 11.2 percent leap in the Eurozone market. By comparison, domestic orders were relatively subdued, registering a 0.7 percent advance.

The December report puts total fourth quarter orders 4.1 percent above their level in the third quarter when they rose 3.7 percent. Domestic demand was up 1.7 percent. Accordingly, today's data underscore the buoyancy of German manufacturing which, already enjoying boom conditions, looks set to see a further rise in inflationary pressures over coming months.

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.