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Economy in Brief

German Orders Rebound in Surprise Show of Resiliency
by Robert Brusca October 7, 2008

The German economy shows some resilience in its factory sector in August as orders reverse a string of eight months of declines to rise by 3.6% in August. Overall and foreign orders had previously each fallen for eight months in a row. Such a string of negativism does simply go way without some good reason. AND right now we don’t have any reason at all. The upward surprise builds on a similar upward surprise from retail sales in the month. Even so trends in both sectors still point lower. In the case of retail sales, some calendar effects may have helped to boost those sales. In the case of factory orders there appears to be some lumpy orders that constitute ‘one-off’ events leaving us expecting more weakness in the months ahead.

German foreign orders remain in a consistent weak pattern with flatness or sequential slowing in trends well in train. Domestic orders are more resilient actually showing an accelerating profile from 12-months to 6-months to 3-months. This pattern appears to be more the result of some statistical oddity than something that is in sync with the realities of the economic data we have been seeing. The domestic German economy definitely is not accelerating.

Still the MFG sales trends continue to be upbeat for most classes of goods except consumer nondurables. Consumer durables sales jumped in August after a drop in July.

All this may raise some question marks about the future. But, with the euro still overly strong and the financial crisis spreading in Europe, the safest bet is that this month’s buoyancy is an unrepeatable bit of good news. Economic conditions in Germany will continue to get worse.

German Orders and Sales By Sector and Origin
Real and SA % M/M % Saar
  Aug-08 Jul-08 Jun-08 3-MO 6-Mo 12-Mo YrAgo QTR-to-Date
Total Orders 3.6% -1.3% -2.6% -1.2% -0.6% -1.3% 4.7% -7.7%
Foreign 3.5% -0.3% -4.5% -5.5% -2.8% -3.0% 6.1% -7.3%
Domestic 3.7% -2.2% -0.5% 3.2% 1.6% 0.4% 3.3% -8.2%
Real Sector Sales
MFG/Mining 4.1% -2.4% -0.2% 5.3% 2.6% 2.2% 5.8% -4.0%
Consumer 2.3% -0.4% -1.4% 2.0% 1.0% -1.7% 1.6% -1.0%
Cons Durables 7.1% -4.2% 1.7% 18.4% 8.8% -1.0% 0.8% -3.7%
Cons Non-Durable 1.5% 0.3% -1.9% -0.8% -0.4% -1.8% 1.7% -0.4%
Capital Goods 5.3% -4.0% 0.9% 7.9% 3.9% 4.1% 7.9% -8.2%
Intermediate Goods 3.5% -1.7% -1.0% 2.9% 1.4% 2.1% 5.6% -0.8%
All MFG-Sales 4.0% -2.2% -0.3% 5.4% 2.6% 2.2% 5.2% -3.6%
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