German Manufacturing New orders and Sales: An Increase in Domestic Demands?

The Value of Manufacturing New Orders in Germany were strong in January, up 3.7% from December. Following the peak of 129.6 (2005=100) reached in November 2007, the value of new orders dropped 39% to 79.2 in February, 2009. The recovery from the low point has been sharp and, currently, new orders are just 8% below their November 2007 peak Sales, on the other hand, were up only 0.6% in January. Sales, however, did not fall so sharply nor so far as new orders The index of the value of sales declined 27% from its peak of 121.7 in February 2008 to 89.4 in April 2009.The recovery in sales since then has been more muted than that of new orders, but sales are currently only 6% below their peak of February, 2008. Manufacturing New Orders and Sales are shown in the first chart.

The sharp rise in new orders in January was due largely to domestic demand. Domestic new orders rose 5.8% from 107.2 to 113.4 while foreign orders rose 2.1% from 122.0 to 124.6. Domestic sales increased 2.2% in January while foreign sales declined 1.1%. A glance at the second and third charts showing the breakdown of orders and sales between domestic and foreign demand, shows clearly that until recently foreign demand has been the dominant force in orders and sales. While one month's result does not determine a trend, the January data on sales and orders showing an increase in domestic demand is encouraging.