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Economy in Brief

German Order Trends are Mostly Cycling Lower
by Robert Brusca May 8, 2008

German orders have taken some time to weaken since the euro began climbing strongly. Arguably it is now a plethora of factors that are dogging the trend including the strong euro but also the fallout from the financial turmoil and the transmission of weakness from faltering growth in the US and elsewhere – to extent that theses things are different.

Orders both domestic and foreign have eased their pace from their year ago growth rate and also sequentially through six-month and three-month growth rates as well. Both domestic and foreign orders have decelerated their pace. The quarterly readings show negative growth rates for both domestic and foreign orders in 2008-Q1.

But this slowing has yet to hit the pace of sales. Sales growth rates are still largely rising except for consumer goods –long the Achilles Heel of this expansion. Capital goods sales have slowed but are still strong in the Q1 period. Intermediate goods sales remain relatively robust.

On balance the orders figure that tend to lead the cycle show that he boom days in MFG are coming to a close. Since they are slowing sharply and since growth rates have turned negative, they hint that the slowdown could be severe.

German Orders and Sales By Sector and Origin
Real and SA % M/M % Saar
  Mar-08 Feb-08 Jan-08 3-Mo 6-Mo 12-Mo Yr Ago QTR-2-Date
Total Orders -0.6% -0.6% -0.7% -7.2% -3.6% 5.1% 11.5% -5.3%
Foreign -0.4% -1.1% -0.4% -7.6% -3.9% 6.8% 12.7% -9.6%
Domestic -0.9% 0.0% -0.9% -6.6% -3.4% 3.3% 10.4% -0.2%
Sector Sales
MFG/Mining -0.5% -0.2% 2.1% 5.9% 2.9% 4.6% 9.3% 9.2%
Consumer Goods 0.2% -1.8% 1.0% -2.3% -1.1% -0.7% 5.6% -1.0%
Consumer Durables -0.9% -0.3% 0.8% -1.6% -0.8% 0.4% 5.1% 4.3%
Consumer Nondurables 0.4% -2.0% 1.1% -2.2% -1.1% -0.9% 5.9% -2.0%
Capital Goods -2.7% -0.8% 4.2% 2.7% 1.3% 5.4% 9.7% 10.9%
Intermediate Goods 1.9% 1.6% 0.2% 15.5% 7.5% 6.7% 11.2% 13.2%
All Manufacturing Sales -0.5% -0.2% 2.1% 5.7% 2.8% 4.1% 9.3% 9.1%
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