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Economy in Brief

German Orders Sink Fast – So Much for a Mild Impact on Europe
by Robert Brsuca December 5, 2008

German new MFG orders dropped 6.1% in October from September. In September they fell 8.3% from August. The party is over.

Foreign orders are falling faster overall but in the month domestic orders almost caught up in pace with foreign weakness: compare -6.2% to -6.1%. In the new quarter domestic orders are falling at a 40.1% pace while foreign orders are falling at a 55.3% pace. Both are horrific numbers. Whatever skepticism Europeans have had about this slowdown or its ability to reach out and sting them too, those reservations should now be gone. Europe is being led lower by Germany and at a very rapid pace.

Sales in Germany are now all on negative trends for the quarter. Orders have been pared even more dramatically than sales reflecting the forward-looking creatures that they are. The economy is spiraling lower at a rapid pace. The ECB does have more room to cut rates than the Fed but we have seen that amounts to pushing on a string. The US is gearing up for more fiscal stimulus. Meanwhile, the last we heard from German Chancellor Merkel, she was against getting into a stimulus race. She may be right about that, but that is no excuse not to ‘run’ at all.

German Orders and Sales By Sector and Origin
Real and SA % M/M % Saar
  Oct-08 Sep-08 Aug-08 3-MO 6-Mo 12-Mo Yr Ago QTR-2-Date
Total Orders -6.1% -8.3% 3.5% -36.8% -20.5% -17.3% 11.2% -48.2%
Foreign -6.2% -11.6% 4.3% -44.3% -25.4% -22.7% 17.0% -55.3%
Domestic -6.1% -4.7% 2.8% -28.2% -15.2% -11.3% 5.2% -40.1%
Real Sector Sales                
MFG/Mining -0.2% -4.3% 4.5% -0.7% -0.3% -3.4% 6.9% -9.4%
Consumer -0.1% -1.2% 2.0% 2.8% 1.4% -3.5% 2.3% -1.4%
Consumer Durables -0.6% -6.2% 6.8% -1.7% -0.9% -4.9% -0.2% -15.2%
Consumer Non-Durable 0.0% -0.2% 1.2% 4.0% 2.0% -3.3% 2.9% 1.6%
Capital Goods 0.7% -5.4% 5.7% 2.8% 1.4% -3.3% 9.7% -7.0%
Intermediate Goods -1.2% -4.5% 4.2% -6.4% -3.3% -3.2% 6.1% -15.9%
All MFG-Sales -0.1% -4.2% 4.4% -0.3% -0.2% -3.3% 6.4% -8.8%
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