DE: Manufacturers' Orders

Thu Apr 05 01:00:00 CDT 2018

Consensus Actual Previous Revised
Month over Month 2.0% 0.3% -3.9% -3.5%
Year over Year 3.7% 8.3% 8.6%

Manufacturing orders posted a disappointingly small rebound in February. Although January's 3.9 percent monthly slump was trimmed a few ticks, a 0.3 percent mid-quarter rise was well short of expectations and left orders at their second lowest level since last September. Annual growth was 3.7 percent, less than half the previous period's 8.6 percent rate.

The monthly headline rise was wholly attributable to capital goods which saw a 0.9 percent increase. Less optimistically, basics (minus 0.5 percent) and, in particular, consumer goods (minus 2.4 percent) again struggled.

To make matters worse, with a 1.4 percent monthly fall, domestic orders lost further ground after a 2.3 percent slide last time. By contrast, foreign demand was up a respectable 1.4 percent as a 4.5 percent surge in orders from the rest of the Eurozone more than offset a 0.6 percent drop elsewhere. On a yearly basis, domestic orders were down fully 5.2 percent while overseas climbed 10.8 percent.

The February orders report is worrying. The monthly data are very volatile but today's figures put average orders in January/February 1.6 percent below their mean level last quarter. Bad weather may have had some impact but it would seem that the boom conditions enjoyed by German manufacturing for some time now may be starting to fade.

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.