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Economy in Brief

German New Orders Decline
by Robert Brusca April 8, 2009

The growth rates for German industrial orders are not getting progressively worse, but they still are bad and the three-month growth rate still is worse than the six month growth rate. There may be a hint or whiff of slowing down the pace of the order decline, but it’s a vague hint. Over THREE MONTHS the pace of order decline in real terms is -51.5% led by a 60.2% pace of decline in foreign orders and a lesser but still severe 39.3% pace of decline in new domestic orders.

The pace of order decline in the current quarter annualized is just about the same as the pace in 2008-Q4. Meanwhile real sector sales continue to drop at a steadily accelerating pace. Capital goods declines lead the parade over three-months, six months and twelve months.

These sorts of declines cannot go on for very long without bringing disaster. It is reasonable to think we are on the cusp of seeing a slowdown in the rate of unravel. There are some stimulus programs afoot in Europe. But just as clearly the Euro-view and the ECB view has been to be less helpful than the view from the authorities in the US. In global terms these ‘guys’ are intending to piggy-back a bit on US generated stimulus.

I was shocked to see how blasé Europe really is when Juergen Stark of the ECB was disapproving of the extension of IMF credit. We are in the middle of a real financial and growth problem. And Stark was not pleased to get some help that would be channeled to the neediest. Without this help, recession would hit less developed and smaller nations harder; they would have to wait for the larger economies to pick up in order to benefit. Europe is not doing that every quickly, as we just observed, above. In the case of Europe the biggest risk is in Eastern Europe and there the EU has taken some special steps to provide assistance. This recession has been a good case study in how nations ‘take care of their own’. But the IMF money which is less that way and is geared more toward need without bilateral strings attached is very helpful and timely. I do not share the Stark/ECB reluctance.

For now the German data on industrial orders tell us that Europe is weakening at a rapid pace. German domestic demand may be faring a tad better as it spins off the vaguest hint of slowing its descent. But for foreign orders the assessment for German data remains quite bleak.

German Orders and Sales By Sector and Origin
Real and SA % M/M % Saar
  Feb-09 Jan-09 Dec-08 3-MO 6-Mo 12-Mo Yr Ago QTR-2-Date
Total Orders -3.5% -6.7% -7.3% -51.5% -30.4% -36.3% 4.4% -54.5%
  Foreign -1.3% -10.9% -9.7% -60.2% -36.9% -40.7% 4.7% -63.7%
  Domestic -5.7% -1.8% -4.6% -39.3% -22.1% -30.9% 3.9% -41.2%
Real Sector Sales
MFG/Mining -4.2% -6.6% -5.5% -49.0% -28.6% -23.2% 5.1% -49.7%
  Consumer -3.2% -6.0% 3.4% -21.7% -11.5% -11.2% -0.6% -27.4%
  Cons Durables -7.9% -2.2% -5.3% -47.0% -27.2% -22.3% -0.6% -41.3%
  Cons Non-Durable -2.5% -6.6% 4.9% -16.6% -8.7% -9.3% -0.5% -24.6%
Capital Gds -4.8% -9.4% -8.4% -61.0% -37.5% -29.2% 9.2% -61.3%
Intermediate Gds -3.5% -4.6% -7.5% -47.5% -27.5% -24.2% 3.9% -48.5%
All MFG-Sales -4.3% -6.6% -5.8% -49.7% -29.1% -23.4% 5.1% -50.2%
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