Manufacturing orders rose further in September, but only after a sharp downward revision to the August gain. A 0.2 percent monthly increase beat the market consensus but, following a 1.9 percent advance in mid-quarter, still only dented an 11.4 percent slump in July. Annual growth improved from minus 6.4 percent to minus 4.0 percent but orders were 3.1 percent below their level at the end of 2022.

As it is, the monthly headline rise was wholly attributable to overseas demand which grew fully 4.2 percent. By contrast, the domestic market was very soft, posting a 5.9 percent drop that made for the lowest level since May 2020. Much of the overall increase was due to the buoyancy of machinery and equipment which climbed 8.5 percent but strength here was almost offset by a 12.5 percent slump in computer, electronic and optical products.

Despite back-to-back gains, total orders in the third quarter fell 4.0 percent versus the previous period, albeit with the domestic component down a smaller 1.7 percent. The ongoing downtrend warns that industrial production is unlikely to experience any near-term recovery and will probably subtract from fourth quarter GDP growth, boosting the chances of recession. Today's update puts the German RPI at minus 14, but the overall underperformance still only reflects the unexpected weakness of prices as the RPI-P stands at exactly zero.

Orders have been highly volatile, rising solidly in August and June sandwiched between an 11.3 percent collapse in July. For September, forecasters are calling for a 1.1 percent dip.

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.