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Economy in Brief

 More Evidence of German Economic Strength:  Manufacturing New Orders Surprisingly Strong in March
by Louise Curley May 7, 2007

In spite of a consensus view that German new manufacturing orders in real terms were due for a decline in March, they rose 2.4% from February and were 13.81% above March, 2006. Domestic orders rose 2.90% in March and were 11.91% above March, 2006. In the face of a strong euro and a slowdown in the United States, foreign orders were up 2.10% on the month and 15.72% on the year. The strong positive trend in manufacturing new orders is shown in the first chart.

The rise in foreign new orders is due, in large part, to the strong demand for German exports from Asian countries. Data on exports of goods by country are available only through February, but the strong demand from the Asian countries relative to that of the U. S. is clearly shown in the second chart.

The recent data on domestic new orders are encouraging in that they show signs that domestic demand is gaining strength. One of the biggest increases in new orders has been that for machinery and equipment where both domestic and foreign demand have risen sharply as can be seen in the third chart. On April 24, the German government raised its forecast of 1.7% growth in 2007 to 2.3%, or just above the current estimate of 2.2% growth for the U.S.

 (2000 Prices)  Index 2000=100
Mar 07 Feb 07 Mar 06 M/M % Y/Y % 2006 2005 2004
Total 130.20 127.10 114.40 2.44 13.81 118.99 108.66 103.24
   Domestic 113.7 110.5 101.6 2.90 11.91 105.5 98.2 96.3
   Foreign 150.9 147.8 130.4 2.10 15.72 135.8 121.7 111.9
Machinery and Equipment 153.0 140.0 113.7 9.29 34.56 121.5 107.9 102.3
  Domestic 124.5 114.5 93.7 8.73 32.87 103.2 93.0 91.9
   Foreign 181.0 165.2 133.5 9.56 35.58 139.5 122.6 112.5
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