Germany's manufacturing sector showed a notable rebound in new orders in September, rising by 4.2 percent from August. The rebound only followed a revised 5.4 percent slump in August but there are signs of a recovery in demand. Notably, this growth is driven by substantial gains in specific sectors: the manufacture of transport equipment surged by 117.1 percent, spurred by large-scale orders in aircraft, ships, and military vehicles, while the automotive industry rose by 2.9 percent. However, challenges persist, with sectors like basic metals and machinery declining by 10.0 percent and 3.6 percent, respectively.

Domestic demand was strong, with a 3.6 percent increase and was supported by a 4.4 percent rise in foreign orders. Orders from the euro area climbed by an impressive 14.6 percent, though orders from non-euro countries fell by 1.6 percent. By type, capital goods rose sharply by 8.3 percent, signalling robust business investments, while consumer goods orders grew by 3.8 percent, and intermediate goods fell by 2.4 percent.

This latest update leaves the RPI at 49 and the RPI-P at 45, meaning that economic activity is exceeding market expectations.

Forecasters expect orders to bounce back by 1.5 percent in September on the month after a nasty 5.8 percent plunge in August.

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.