New manufacturing orders in July increased by 2.9 percent month-over-month, primarily due to substantial gains in the transport equipment sector, which increased by 86.5 percent. These gains were a result of large-scale orders for aircraft and military vehicles. It is also worth noting that electrical equipment experienced an 18.6 percent increase. Nevertheless, when these large scale orders are removed from the analysis, the absence of these substantial orders result in a 0.4 percent reduction in new manufacturing orders and a 6.1 percent decrease in machinery orders, suggesting that development was unequal across sectors.

The euro-area orders experienced a 5.9 percent rise in response to the surge in foreign demand, while domestic orders remained unchanged. Intriguingly, capital and intermediate goods experienced positive growth by 3.5 percent and 4.4 percent, respectively. While consumer goods experienced a 5.8 percent decline, indicative of cautious household demand. Despite these increases in orders, turnover decreased by 2.3 percent in July, suggesting a potential delay between the increase in orders and the actual sales.

These data indicate a bifurcated recovery, with certain sectors experiencing rapid growth as a result of substantial contracts, while others encounter challenges. This suggests that manufacturing performance may become unpredictable, putting the RPI and RPI-P within the market consensus of minus 9 and 7 respectively.

Manufacturing orders are expected to decrease a monthly 1.8 percent in July versus June's 3.9 percent swing higher that was led by the auto sector.

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.