German Manufacturing New Orders Decline In October

German manufacturing new orders in volume terms fell 2.14% in October to 91.4 (2005=100) from 93.4 in September.  This was the first drop since orders began to rise in March of this year.  Domestic orders were down only 0.55% but foreign orders declined 3.48%. The continued rise in the Euro is taking its toll on German exports.  A decline of 6.74% in foreign demand for investment goods accounted for the drop in foreign orders. Foreign orders for consumer goods actually increased by 5.27% in October and foreign orders for intermediate goods rose slightly--0.30% .  Foreign orders are shown in the first chart.

Domestic demand for investment goods also declined in October, but only by 1.18%.  In contrast to the rising foreign trend, orders for domestic consumer goods fell by 5.84%, reflecting lack luster retail sales.  Domestic demand for intermediate goods increased by 1.20%.  Domestic orders are shown in the second chart.

An indicator of the price level of new orders can be computed by dividing the value series by the volume series.  The resulting calculation is shown in the third chart compared with the Producer Price Index for manufacturing.  The two indexes show the same broad trends.  The PPI has been falling since June 2008 and appears to be leveling off.  The new orders index has been declining since September 2008 and is yet to level off.