German Factory Orders Decline in August, but Hold Double-Digit Gains over Year-Ago Volume

Press reports this morning bemoan what they describe as a disappointing outturn for German factory orders in August. Total orders were indeed off 1.5% from July (seasonally adjusted in 2000 prices), with domestic demand down 1.0% and foreign orders down 2.1%. It was the second decline in three months.

Of 12 industries reported, eight experienced decreases, most notably in textiles, leather goods, machinery and electrical equipment. In contrast, chemicals, basic metals and transport equipment saw gains.

As we occasionally highlight with such items as factory orders, a monthly swing one way or another may serve less to show fundamental change than to illustrate the volatility of the information. Thus, a month ago in this space, we described quite respectable development of these orders, with those from foreign customers standing out. Clearly the August decline is not particularly welcome, especially in the face of continuing increases in energy costs, but at the same time, the wide monthly ups and downs in orders suggest that commentators who express alarm over a single report should probably be taken with caution. Note for evidence the sizable advances over year-ago volumes: total foreign orders are up 11.6% and total orders are higher by 10.3%. All but two industries, textiles and leather, share in this growth.