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Economy in Brief

Orders Continue In Their Upswing
by Robert Brusca February 24, 2010

Manufacturing orders are up by 0.8% in December but the sequential growth rates do not show that the growth of orders continues to accelerate. MFG sales are also slowing as capital goods and intermediate goods sales rates over three-months are weaker than sales rates for six months

In December domestic orders have been especially strong rising by 6.1% while foreign orders advanced by 2.2%. But over three months Domestic orders are up at just a 0.8% rate while foreign orders are up at an 11.9% pace. The pattern of growth rates in the chart shows us that domestic and foreign growth rates peaked about six months ago and have since been slowing down even though they continue to grow. This is one reason for concern about whether the recovery is building momentum or not.

Among large EU/EMU countries Italy and the UK are demonstrating still accelerating orders from 12-months to six months and again from six months to the three-month horizon. In France orders accelerated in six months compared to 12-months and have stayed near that mark for 3-month growth rates. Germany shows a decided deceleration with growth rates rising in six-months compared to 12-months then submerging and going negative for the recent three-month period. Still the Yr/Yr growth rates moved sharply higher in December compared to November everywhere but in the UK. But the sequential growth rates do give more of an up-close view of growth and on that basis momentum truly is fading.

Obviously the various EU/EMU countries have some differences. But the overriding message is that orders growth is slowing. It is still positive but it is slowing. Europe now will be burdened with the growing and festering problems of Greece and possibly other debt ladened e-Zone members. The European consumer does not seem to have gotten in gear. The recent German IFO survey was weak but it may have been impacted by weather. We are always on a bit of a weather watch at this time of year. But apart from weather there are ample trends that tell us to be cautious about depending on the European recovery being too strong.

Selected Euro-Area and UK Industrial Orders
Saar except m/m Mo/Mo Dec
09
Nov
09
Dec
09
Nov
09
Dec
09
Nov
09
Euro-Area Detail Dec
09
Nov
09
Oct
09
3Mo 3Mo 6mo 6mo 12mo 12mo
MFG Orders 0.8% 2.7% -2.1% 5.6% 9.2% 16.9% 21.5% 9.5% -3.2%
MFG Sales -0.4% 1.4% 0.4% 6.1% 4.3% 8.8% 7.9% -2.8% -9.2%
Consumer 0.7% 1.0% -0.2% 6.1% -3.4% 3.7% -0.4% -2.6% -5.3%
Capital -1.9% 0.5% -0.4% -7.2% 6.4% 5.1% 5.8% -5.7% -10.3%
Intermediate 6.1% 1.3% -6.8% 0.8% 4.1% 18.6% 20.0% 7.7% -1.1%
Memo:MFG
Total Orders 0.8% 2.7% -2.1% 5.6% 9.2% 16.9% 21.5% 9.5% -3.2%
E-13 Domestic MFG orders 6.1% 1.3% -6.8% 0.8% 4.1% 18.6% 20.0% 7.7% -1.1%
E-13 Foreign MFG orders 2.2% 3.0% -2.3% 11.9% 35.2% 20.8% 34.2% 10.0% 0.4%
Countries: Dec09 Nov09 Oct09 3Mo 3Mo 6mo 6mo 12mo 12mo
Germany (MFG): -1.8% 3.2% -2.1% -3.4% 9.9% 10.3% 23.7% 4.2% -2.0%
France(Ind): 17.1% 0.5% -8.2% 36.4% -7.3% 40.5% 4.5% 15.5% -4.2%
Italy (Ind): 4.7% 2.9% 0.7% 38.5% 47.6% 18.5% 15.4% 5.3% -3.5%
UK (Engineering Industy): 8.5% -15.6% 14.1% 19.1% -18.1% 7.1% -9.9% -16.2% -3.8%
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