Sound bites: early signs of life for German new orders

It’s still far too early to say that there may be some signs of economic spring in German leading indicators, but at least a small bounce in industrial orders underlines that hopes are still being kept alive. German industrial orders rose by 2.3% in February, reversing a stronger revised 1.6% drop in January (was originally -1.9% m/m). It was encouraging to see that the bounce was led by a 2.7% m/m gain in non-Eurozone orders, underlining that there might be some early signs of recovery out there in the global economy. Emerging markets, especially in Asia, remain in the forefront of global growth and it was a positive sign that German capital goods orders rose by 3.5% over the month, suggesting that companies may be re-tooling for stronger growth ahead. The latest sell-off in the euro should provide a further welcome boost to export order books with high premium German investment goods looking much more competitive.

While the short term trends may suggest some signs of the downturn bottoming out, overall order books in Germany are still operating well below the long term growth trend. Factory performance is still being held in check by the on-going recession in the troubled Eurozone periphery economies. Germany remains one bright spot in an otherwise troubled Eurozone economy, but its star could still wane unless the Euro area manages to free itself from recession soon. It will still be a close shave whether Germany managed to dodge a double dip into recession in the first quarter of this year.

GERMAN INDUSTRY ORDERS    FEB 13       JAN 13
 Month-on-month change   +2.3         -1.6
 Index (base 2005)       103.4        101.1

                                 FEB 13             JAN 13
                           Index      Pct     Index      Pct
                                     change            change
 Total domestic orders     101.2    +2.2      99.0    +0.1
 Total foreign orders      105.2    +2.3      102.8   -2.7
     of which euro zone    94.7     +1.6      93.2    -3.8
        non-euro zone      112.5    +2.7      109.5   -2.1
 Intermediate goods        98.0     +0.9      97.1    -0.1
 Of which: domestic        98.0     +0.4      97.6    +1.0
           foreign         98.1     +1.7      96.5    -1.4
    of which euro zone     96.2     +2.2      94.1    -5.1
       non-euro zone       99.9     +1.1      98.8    +2.2
 Capital goods             107.7    +3.5      104.1   -2.3
 Of which: domestic        105.3    +4.4      100.9   -1.1
           foreign         109.2    +3.0      106.0   -3.0
    of which euro zone     93.3     +2.1      91.4    -2.4
       non-euro zone       117.9    +3.3      114.1   -3.2
 Consumer goods, durables  100.1    +0.1      100.0   -2.3
 Of which: domestic        96.1     +0.5      95.6    +2.2
           foreign         103.6    -0.1      103.7   -5.8
    of which euro zone     96.9     -3.0      99.9    -5.5
       non-euro zone       111.0    +2.9      107.9   -6.2

Two-month comparison Feb/Jan 13 with previous two months:

 Industrial orders                  +0.1
 Domestic orders                    +1.3
 Foreign orders                     -0.9
       of which euro zone           -1.3
            non-euro zone           -0.6
 Intermediate goods                 -0.2
 Capital goods                      +0.6
 Consumer goods, durables orders    -1.6

Unadjusted two month comparison Feb/Jan 13 with same period a year ago:

 Industrial orders                  -1.9
 Domestic orders                    -3.5
 Foreign orders                     -0.6
 Intermediate goods                 -5.4
 Capital goods                      +0.5
 Consumer goods, durables orders    -1.2