· Total orders in the EMU area have fallen m/m in October after six straight months of increasing. The Yr/Yr drop in orders is a still substantial 15.2%. Foreign orders Yr/Yr are off by 13.4% while domestic orders are off by 16.1%. Over three months the Zone’s domestic orders are much weaker, falling at a 15.6% pace compared to foreign orders that are off by just 3.5%. Over six months domestic orders and foreign orders are up, and foreign orders are up on that span at a 20% annual rate.

· Country detail shows that Germany leads the EMU parade among large economies. Its orders are still up by 3.5% over three months despite a dip in October. Still all large EU countries are showing a fall off in orders growth over three months compared to six months.

· In a December report released today the Markit services indices showed that despite this MFG order weakness in October the services sector in EMU continued to improve though year-end. The EMU services sector diffusion index from Markit moved up to 53.63 in Dec. from 53.04 in Nov. While down on the month France shows the most strength in the service sector among large EMU members

· Still, the MFG sector is the cyclical one and orders data, though lagging, show that some softening was occurring in October. The more up-to-date market MFG diffusion surveys show us that MFG progress has continued though year end but has slowed. EMU is being pulled along by demand from outside of the region. Export orders continue to be the driving the EMU expansion. Yet, the EMU currency, the euro, continues to be high-valued, even if off peak, giving reason to wonder how long the e-zone will be able to continue to be pulled ahead by its external sector.