Global| Sep 04 2008German Orders so Long Resistant to Weakness Have Fully Succumbed
Summary
German orders are clearly falling. Orders are dropping from domestic sources as well as from foreign sources. The degree of decline is accelerating both domestically and from overseas; the degree of the drop is substantial. The new [...]
German orders are clearly falling. Orders are dropping from domestic sources as well as from foreign sources. The degree of decline is accelerating both domestically and from overseas; the degree of the drop is substantial.
The new quarter is quite new, but one month into it, the degree of decline is severe for orders and sales.
Orders are weak enough and have been weak enough for long enough that real sales are starting to show adverse trends. Over three months all major sales categories are showing significant volume declines.
In comment today Nout Wellink of the Dutch central bank warned that the credit crisis would linger for several years. European Economic and Monetary Affairs Commissioner Joaquin Almunia said that, "We're experiencing a serious economic downturn…’ he attributes the slip to several causes but adds that fears of recession are exaggerated. Still, the notion of recession is haunting Europe as it has haunted the US. Former BOE governor Eddie George said, "My impression is that most forecasters now expect little growth if any at all across the industrial world as a whole over the next year or so ahead, and certainly technical recession cannot be ruled out."
In Germany there seem to be a difference of opinion on the subject. Up until now most pronouncements have been upbeat hold-the-line sort of things. But yesterday, Deputy Economy Minister Walther Otremba said in an interview that, "Economic indicators and surveys are clearly pointing down and we must expect a slump." He added, "The crisis won't be over quickly; whether or not things will pick up next year is doubtful." Still, yesterday German Finance Minister Peer Steinbrueck also said, "It is completely irresponsible for some pessimists to proclaim, on the basis of just one single quarter of slightly negative growth, that the specter of recession is looming,"
Europe’s data are weak enough to talk of slumps and recessions; the talk is not all on the back of one quarter of declining GDP. Europe’s policymakers (at least the ones in office) do not want to entertain that notion, however. That reluctance suggests either that they are unrealistic or plan to do nothing to avert the growing weakness.
| German Orders and Sales By Sector and Origin | ||||||||
|---|---|---|---|---|---|---|---|---|
| Real and SA | % M/M | % Saar | ||||||
| Jul-08 | Jun-08 | May-08 | 3-MO | 6-Mo | 12-Mo | YrAgo | QTR-2-Date | |
| Total Orders | -1.7% | -2.6% | -1.3% | -20.0% | -10.6% | -4.1% | 7.2% | -20.7% |
| Foreign | 0.3% | -4.5% | 0.1% | -15.3% | -8.0% | -3.4% | 7.0% | -15.2% |
| Domestic | -3.6% | -0.5% | -2.9% | -24.7% | -13.2% | -4.8% | 7.5% | -25.8% |
| Real Sector Sales | ||||||||
| MFG/Mining | -2.3% | -0.2% | -0.7% | -12.2% | -6.3% | -0.7% | 5.8% | -15.0% |
| Consumer | -0.4% | -1.4% | -0.1% | -7.2% | -3.7% | -2.5% | 1.6% | -7.8% |
| Consumer Durables | -3.4% | 1.7% | -3.2% | -18.1% | -9.5% | -4.7% | 2.9% | -18.6% |
| Consumer Nondurables | 0.2% | -1.9% | 0.6% | -4.6% | -2.3% | -2.1% | 1.4% | -5.3% |
| Capital Goods | -4.4% | 0.9% | -2.5% | -21.9% | -11.6% | -1.0% | 7.8% | -24.9% |
| Intermediate Gds | -1.0% | -1.0% | 1.5% | -2.3% | -1.1% | 0.4% | 6.4% | -6.9% |
| All MFG-Sales | -2.1% | -0.3% | -0.7% | -12.1% | -6.3% | -0.8% | 5.5% | -14.6% |
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.
More Economy in Brief
