DE: Manufacturers' Orders

Mon May 07 01:00:00 CDT 2018

Consensus Actual Previous Revised
Month over Month 0.5% -0.9% 0.3% -0.2%
Year over Year 3.2% 3.7% 3.1%

Manufacturing orders were unexpectedly weak in March. A 0.9 percent monthly fall followed a revised 0.2 percent drop in February and means that orders have now declined for three successive months, the first time that this has happened since the third quarter of 2015. Annual growth crept a tick firmer to 3.2 percent but only because of an even sharper decrease in March 2017.

However, the weakness of the overall monthly change was at least wholly attributable to overseas demand. This contracted 2.6 percent (Eurozone minus 3.0 percent) and more than offset a 1.5 percent rise in domestic orders.

Within overall orders, capital goods were 1.8 percent lower than in February and basics were off 0.3 percent. By contrast, consumer goods expanded 2.2 percent.

The March data put total first quarter orders 2.1 percent below their level in the fourth quarter last year and warn that the slowdown in industrial production seen at the start of 2018 may have further to run. The latest outturn is some 4.6 percent below its peak level in December 2017.

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.