German Manufacturing Orders And Sales Recovering From Their Steep Declines

The volume of new orders in German Manufacturing rose 4.4% in May after a small rise of 0.1% in April and a 3.7% rise in March.  The three month rise has brought the level of new orders to 84.5 (2005=100).  This is still 33% below the peak of 126.1 recorded in November, 2007.  Sales of German Manufacturing and Mining product rose 4.5% in May after a decline of 2.0% in April and a 1.6% rise in March. Sales are now at an index level of 91.8, 21% below the peak of 115.7 reached in January, 2008.  To put the recent improvements in perspective, the volume of new orders and sales over the 8 plus years are shown in the first chart.

Much of the improvement in both orders and sales was due to a jump in foreign sales.  While domestic new orders rose 3.9% in May, new orders from the Euro Area countries rose, 5.2% and from the non Euro Area countries, 8.2%.  The comparable figures for sales were 2.9%, 3.9% and 9.4%.   The month to month percent changes in domestic new orders, Euro Area countries new orders and Non Euro Area countries new orders are shown in the second chart.

Signs of recovery in new orders and sales in the manufacturing sector are particularly important for Germany as manufacturing plays such an important role in the German economy.  Manufacturing accounts for about 25% of Germany's GDP in contrast to the United States where manufacturing accounts for about 14% of the economy.