Manufacturing Sales and New Orders in Germany

July data on manufacturing sales and new orders for Germany, released today, present a mixed picture. Manufacturing and mining sales in nominal terms to the German domestic market increased 2.28% in July, one of the few times in recent years that the increase in domestic sales was greater than that of foreign sales, which were up only 0.49%. The trend in new orders, however, suggests that stepped up growth in domestic sales and the deceleration of foreign sales growth may be short lived. Domestic new orders declined by 0.29%. in July while foreign new orders rose sharply--8.24%.

New orders and sales are obviously closely related as shown in the first chart which plots total sales and new orders lagged one month. The correlation between the two series is .90. The second and third charts, contrast foreign and domestic sales and foreign and domestic new orders. Domestic new orders and sales have shown little growth over the past five years. Foreign orders and sales have shown a good upward trend since 2003 in spite of a rise in the Euro over much of this period until recently. Growth in the manufacturing industry is Germany is still highly dependent on foreign demand.