Manufacturing orders extended their downtrend in March. With February's previously reported gain revised away to leave a 0.8 percent drop, a 0.4 percent monthly fall was the third straight decline and much steeper than expected. However, with orders slumping fully 7.7 percent a year ago, annual growth still climbed from minus 9.0 percent to minus 1.8 percent.

The domestic market was rather weaker, posting a 3.6 percent monthly decrease that easily more than reversed February's 1.0 percent bounce. This left home orders at their lowest level since May 2020 in the midst of Covid. By contrast, overseas demand rose 2.0 percent, led by a 10.6 percent jump in demand from the rest of the Eurozone. Overall orders for capital goods and intermediates fell 0.4 percent but consumer goods were up 3.6 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, with the first quarter showing a 4.2 percent fall versus the fourth quarter of last year, the underlying trend is clear enough. Manufacturing remains in the doldrums and until demand begins to recover, the outlook for goods production is only sluggish at best. That said, today's reports only trim the German RPI to 11 and the RPI-P to 21. Overall economic activity is still running somewhat ahead of market expectations.

Manufacturing orders are expected to rise a monthly 0.2 percent in March to match February's lower-than-expected pace.

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.