Having slumped in January after booming in December, manufacturing orders were little changed in mid-quarter. A 0.2 percent monthly rise was well short of the market consensus and left annual growth deep in negative territory at minus 10.7 percent.

The domestic market was rather stronger, posting a 1.5 percent monthly increase although this still left a nearly 11 percent annual decline. By contrast, orders from overseas fell again, this time by 0.7 percent within which the Eurozone was off some 13.1 percent. Overall orders for capital goods decreased 0.6 percent but intermediates increased 1.0 percent and consumer goods 2.2 percent.

Recent sharp swings in so-called large-scale orders have led to heightened volatility in the monthly data that clouds the underlying picture of demand. However, as the data currently stand, average aggregate orders in January/February were 4.3 percent below their mean level in the fourth quarter. Absent any revisions, this leaves March needing a monthly rise of at least 13.5 percent just to keep the current quarter flat. In other words, the near-term outlook for industrial production remains weak. Today's report trims the German RPI to minus 4 and the RPI-P to 9. Economic activity is running much as expected although inflation continues to undershoot forecasts.

Manufacturing orders are expected to increase a monthly 0.8 percent in February versus January's 11.3 percent plunge and December's 12.0 percent surge in swings tied to major orders.

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.