Global| Apr 08 2009German New Orders Decline
Summary
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 [...]
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% |
Robert Brusca
AuthorMore in Author Profile »Robert A. Brusca is Chief Economist of Fact and Opinion Economics, a consulting firm he founded in Manhattan. He has been an economist on Wall Street for over 25 years. He has visited central banking and large institutional clients in over 30 countries in his career as an economist. Mr. Brusca was a Divisional Research Chief at the Federal Reserve Bank of NY (Chief of the International Financial markets Division), a Fed Watcher at Irving Trust and Chief Economist at Nikko Securities International. He is widely quoted and appears in various media. Mr. Brusca holds an MA and Ph.D. in economics from Michigan State University and a BA in Economics from the University of Michigan. His research pursues his strong interests in non aligned policy economics as well as international economics. FAO Economics’ research targets investors to assist them in making better investment decisions in stocks, bonds and in a variety of international assets. The company does not manage money and has no conflicts in giving economic advice.
More Economy in Brief
