The momentum for manufacturing orders took another noticeable dip in May 2024, with new orders sliding by 1.6 percent from the previous month. This marked the fifth consecutive month of decline, signalling ongoing challenges in the sector. Year-over-year, the decline in manufacturing orders was steeper, falling to minus 8.6 percent in May from minus 1.3 percent in April. April 2024's figures were downwardly revised, showing a 0.6 percent decrease in new orders, steeper than the initially reported 0.2 percent.

The manufacture of other transport equipment sectors, encompassing aircraft, ships, and trains, experienced a significant nosedive, with new orders plummeting by 19.2 percent. This sharp decline can be traced back to a lower volume of large-scale orders in aircraft construction compared to the previous month. The automotive industry didn't fare much better, with a 2.9 percent drop in new orders, further dragging down the overall performance. On the other hand, the manufacture of computer, electronic, and optical products sector shone brightly, boasting an impressive 11.2 percent increase in new orders, providing a much-needed boost.

The monthly orders data remain very volatile but an ongoing weakening trend remains clear. Manufacturing continues to navigate through a turbulent period, facing persistent headwinds. Near-term prospects for industrial production are not good. That said, today's report puts the German RPI at minus 38 and the RPI-P at minus 38 signalling that overall economic activity is falling well below market expectations.

Manufacturing orders are expected to increase a monthly 1.0 percent in May versus April's 0.2 percent decline, which was the fourth month in a row to miss the consensus estimate.

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.