Having already rebounded sharply in May, manufacturing orders continued to surge ahead in June. Following a marginally smaller revised 6.2 percent monthly gain, orders jumped fully 7.0 percent, easily beating the market consensus and their best performance since June 2020. Annual growth climbed from minus 4.3 percent to 2.9 percent.

However, headline growth was wholly attributable to foreign demand which expanded some 13.5 percent versus May, largely due to the Eurozone (27.7 percent). By contrast, the domestic market contracted 2.0 percent to stand 4.0 percent below its level at the end of last year. The overall advance was dominated by mechanical engineering (5.1 percent) and other transport equipment (89.2 percent), the latter boosted by a major order in aircraft and spacecraft construction. On the downside, motor vehicles and semi-trailers (minus 7.3 percent) declined.

Today's very mixed bag needs to be seen in the context of March's 10.9 percent slump. This means that, despite the strength of May and June, total orders last quarter were still only 0.2 percent higher than in the first quarter. Even so, the actual data look a good deal better than suggested by recent business surveys. More generally, the June report lifts both the German ECDI (7) and the ECDI-P (8) back above zero, albeit only to the extent that leaves overall economic activity broadly matching market expectations.

Orders are expected to fall 2.4 percent on the month in June which would compare with a much higher-than-expected 6.4 percent jump in May.

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.