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Economy in Brief

German Orders Fall in January and February - Is Euro to Blame?
by Robert Brusca April 4, 2008

German foreign orders is a very volatile series – even when expressed as Yr/Yr gains. While both the domestic and foreign orders series are ragged, each shows a tendency for orders growth to decelerate (see graph). Foreign orders are off especially sharply but the series is so volatile it is difficult to know what to make of the drop off.

The drop off in the quarter to date (two months out of three) shows total orders off at a 4.8% pace, foreign orders off at a 9.9% pace and domestic orders UP at a 1.1% pace.

The message in the foreign/domestic split is that the weakness is being imported. Further, the foreign orders from outside the Euro Area are the weakest portion of foreign orders. That places the blame for weakness back on the strong euro.

Still, the trends for both domestic and foreign orders are clearly lower and become weaker as the sequential data in the table tells us. And Germany has been one of the strongest economies in the Euro Area and it is the largest Euro Area member economy. The weakening in this key economy’s orders is something to be wary of since so far the service sector data have been weaker than the Manufacturing sector which now seems to be emitting new weakening signs of its own.

German Orders and Sales By Sector and Origin
Real and SA % M/M % Saar
  Feb-08 Jan-08 Dec-07 3-Mo 6-Mo 12-Mo YrAgo
Total Orders -0.5% -0.7% -1.2% -9.3% -4.7% 5.4% 10.4%
Foreign -1.1% -0.4% -2.3% -14.2% -7.4% 5.7% 11.7%
Domestic 0.0% -0.9% -0.1% -3.7% -1.9% 5.1% 8.9%
Sector Sales
MFG/Mining 0.1% 2.1% 1.0% 13.3% 6.4% 6.4% 7.7%
Consumer Goods -1.2% 1.0% -0.1% -1.1% -0.6% 0.6% 3.2%
Consumer Durables -0.9% 0.8% 1.0% 3.8% 1.9% -0.2% 5.1%
Consumer Nondurables -1.4% 1.1% -0.4% -2.6% -1.3% 0.7% 2.7%
Capital Goods -0.6% 4.2% 0.8% 19.1% 9.2% 9.8% 7.8%
Intermediate Goods 1.5% 0.2% 1.6% 14.0% 6.7% 5.6% 10.2%
All Manufacturing Sales -0.1% 2.1% 1.1% 13.1% 6.3% 6.1% 7.2%
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