German Manufacturing New Orders and Sales Declined in September

The index of German new orders for manufacturing goods fell 2.6% in September to 133.6 (2000=100) from August, but was still more than 5% above September, 2006. The index of manufacturing sales fell 1.1% in September from August but was 4.2% above September 2006. The first chart shows the indexes for manufacturing new orders and sales.

Domestic orders declined 3.2% and foreign orders 2.2%. The greater decline in domestic orders is somewhat misleading. Included in the foreign orders are orders from the Euro Area countries which are not affected by currency changes. In September orders from these countries increased 0.7% while foreign orders from non Euro area countries declined by 4.6%. It is these non Euro Area countries that have been affected by the rise in the euro. The significant decline in their new orders attests to the impact of the higher euro. The second chart shows the indexes of domestic new orders and the Euro Area and non Euro Area new orders.

All three areas--domestic, Euro Area and non Euro Area--have also been affected by the uncertainties caused by after effects of the turmoil in the US sub prime mortgage market. These effects are seen in the decline in sales to these areas. Manufacturing sales to the domestic market declined 1.1% in September and 1.2% in the foreign market. The decline in sales to the Euro Area countries (1.2%), was greater than that to the non Euro Area countries (1.0%).The decline in new orders suggests that further declines in sales are in the pipelines. The third chart shows the indexes of domestic sales and the Euro Area and non Euro Area sales.