Manufacturing orders unexpectedly fell again in April. A 0.4 percent monthly dip followed an even steeper revised 10.9 percent slump in March and left orders at their lowest level since June 2020, in the midst of the Covid pandemic. However, positive base effects saw annual growth creep up from minus 11.3 percent to minus 10.0 percent.

Domestic demand actually rose a monthly 1.6 percent leaving the headline drop attributable to a 1.8 percent fall in foreign demand (Eurozone minus 2.7 percent). Overall orders were knocked by a 2.5 percent decrease in consumer goods and a 1.7 percent decline in capital goods but boosted by a 2.3 percent gain in intermediates. Machinery and equipment (minus 6.2 percent) and miscellaneous vehicle construction (minus 34.0 percent) were especially weak.

April's setback puts total new orders 6.6 percent below their average level in the first quarter so May/June will have to be a lot stronger if the current quarter is to register positive growth. However, neither the manufacturing PMI nor the Ifo survey were optimistic about last month. As such, the outlook for industrial production remains bleak. More generally, the German ECDI now stands at minus 14 percent and the ECDI-P at exactly zero. Overall economic activity is slightly lagging market expectations but only due to surprisingly weak prices.

Orders collapsed 10.7 percent in March setting up expectations for a sizable 3.7 percent rebound in April.

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.