Foreign Demand for German Manufactures Continues to Boost New Orders

Foreign new orders for German manufactures rose 1.6% in January and were 16.2% above January, 2005. Even new orders from domestic sources, which were down slightly in January from December, were 5.7% above January, 2005. Year-to-year sales data were less dramatic, but still positive, with foreign sales 7.3% higher than January, 2005 and domestic sales, 0.9%. A breakdown of foreign orders between those from the Euro Zone and those from outside the Euro Zone is available from October, 2004 to date. In January, 2006, new orders from the Euro Zone declined 1.9% from December, but were 17.5% above January, 2005, Orders from countries outside the Euro Zone, rose 8.9% in January and were 15.1% above January, 2005.

Because of the volatility in the sales and new order series, we have used three month moving averages to track longer term trends. The first chart shows the trend of new orders from, and sales to, foreign sources. New foreign orders have shown a particularly strong upward trend since early 2005. Currently, new foreign orders are running ahead of sales, suggesting there is support for continued increases in sales.

The same trends are evident in the case of domestic new orders and sales, as shown in the second chart. Both domestic new orders and domestic sales, however, still lag well behind foreign new orders and sales. The third chart compares domestic and foreign sales. On a three month average basis, domestic sales in January, 2006 were barely--1.2%--higher than the January 2001 average. On the same basis, foreign sales were up 21.3% over the same period.