Global| Sep 06 2012German Orders Mark Slight Rebound in July
Summary
German orders rose in July by 0.5%, more than expected. Foreign orders crept higher by 0.1% while domestic orders advanced by 1% on the month. Over three-months and six-months foreign orders are up and their pace of growth is steady. [...]
German orders rose in July by 0.5%, more than expected. Foreign orders crept higher by 0.1% while domestic orders advanced by 1% on the month. Over three-months and six-months foreign orders are up and their pace of growth is steady. Over the same period domestic orders are contracting and despite the uptick in domestic orders in July the three-month rate of growth is increasing its speed in a downward direction for domestic orders compared to six months ago. Over 12 months both the foreign and domestic orders are lower. In both cases the 12-month growth rate has shifted sharply lower from a positive growth rate of 8.5% to 9% over three previous 12-months.
In contrast with orders real sector sales are showing some life and are not on the same deteriorating profile as orders. The data are pretty clear on these trends and it is the orders series that leads. So the sales data appear to be in for a period of weakness ahead. They should not be taken as an independent assessment or as representing good news to counter balance weak orders trends.
The ECB has also taken steps today to affect the outlook for the e-Zone and for Germany, the Zone’s largest economy. It has announced its bond buying scheme for ailing national bond markets but the descriptions of it are coming out in bits and pieces at this point. The program is being called the OMT (outright monetary transactions). For the moment the key provision seems to be that the ECB is not going to claim a senior standing to market participants when it buys under this program. There will be conditionality (of some sort) involved for participating countries, however. There are no interest rate limits associated with the buying program; the ECB will not try to enforce ceilings in national bond market yields, for example. The amounts to be expended are not defined but Draghi has stepped back from calling them unlimited. Draghi declared that the euro is irreversible. The programs were adopted by the ECB with one dissenting vote. Draghi said that voting result was evidence that the ECB had not been ‘hijacked’ by the Southern European countries.
On balance it’s a program for financial help but it is unclear if it also forces real economic adjustment to permit the lower yields that the help-program is supposed to foster to eventually persist on their own merit. The program is geared to buy bonds of 3-yr and shorter (remaining) maturities.
| German Orders and Sales By Sector and Origin | ||||||||
|---|---|---|---|---|---|---|---|---|
| Real and SA | % M/M | % SAAR | ||||||
| Jul'12 | Jun'12 | May'12 | 3Mo | 6Mo | 12Mo | YrAgo | Q-2-D | |
| Total Orders | 0.5% | -1.6% | 0.8% | -1.4% | 2.0% | -4.7% | 8.6% | -2.1% |
| Foreign | 0.1% | -1.5% | 2.6% | 4.7% | 4.3% | -3.2% | 8.4% | -0.5% |
| Domestic | 1.0% | -1.8% | -1.4% | -8.6% | -0.8% | -6.5% | 8.9% | -4.3% |
| Real Sector Sales | ||||||||
| MFG/Mining | 1.8% | -1.4% | 0.7% | 4.5% | 1.5% | -1.5% | 10.6% | 6.6% |
| Consumer | -0.1% | -1.9% | 3.6% | 6.0% | 3.4% | -1.7% | 2.6% | -1.4% |
| Cons Durables | 1.5% | -0.6% | 2.3% | 13.4% | 1.5% | -7.6% | 12.1% | 11.4% |
| Cons Non-Durable | -0.3% | -2.2% | 3.6% | 4.2% | 3.8% | -0.6% | 1.0% | -3.6% |
| Captial Gds | 3.2% | -1.2% | 0.2% | 9.2% | -0.2% | 0.7% | 15.3% | 16.0% |
| Intermediate Gds | 1.0% | -1.4% | 0.5% | 0.3% | 2.3% | -3.8% | 10.4% | 1.2% |
| All MFG-Sales | 1.9% | -1.5% | 0.8% | 5.3% | 1.5% | -1.4% | 10.7% | 7.6% |
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.
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