Manufacturing orders picked up strongly in December but still failed to fully recover November's steep decline. A 3.2 percent monthly bounce followed a shallower revised 4.4 percent drop in mid-quarter and left orders at their second weakest level since August 2020. Annual growth was a lowly minus 9.6 percent, albeit up from minus 10.2 percent.

Domestic demand rose a solid 5.7 percent on the month, its first increase since September and now stands at its highest mark since last June. The overseas market expanded a smaller 1.2 percent (although Eurozone up 9.8 percent) and only dented the previous period's 6.9 percent slump. New orders for intermediates jumped 9.7 percent but capital goods were only flat and consumer goods fell 3.3 percent.

The partial December rebound leaves fourth quarter orders 4.0 percent below the previous period and so points to a still subdued outlook for industrial production. However, with both the German ECDI and ECDI-P at minus 4, more generally economic activity is performing much as expected.

Orders in December are expected to rebound a monthly 2.0 percent after collapsing 5.3 percent November.

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.