Manufacturers orders collapsed in November. Following a shallower revised 0.6 percent monthly rise in October, new business slumped fully 5.3 percent, much steeper than the market consensus and its worst performance since October 2021. The slide slashed annual growth from minus 3.3 percent to minus 11.1 percent and left orders at their lowest level since July 2020.

Domestic demand was down 1.1 percent on the month, its fourth decrease in the last five months. However, it was an 8.1 percent nosedive in the overseas market (Eurozone minus 10.3 percent) that caused most of the damage. New orders for capital goods fell 8.5 percent, intermediates 0.9 percent and consumer goods (0.7 percent).

Today's surprisingly weak update suggests that German manufacturing is in for a rough time at the start of 2023 and increases the chances of the economy as a whole sliding into recession. To this end, the German ECDI now stands at minus 21 and the ECDI-P at minus 8, both readings warning that the downturn might be somewhat steeper than currently anticipated.

Orders in November are expected to fall 0.7 percent after staging a partial recovery in October with a 0.8 percent monthly gain.

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.