German Orders Are Still Challenged; Volatile Foreign Orders May Show Some Recovery

Real German orders fell by 0.4% month-to-month in March after falling by 0.8% month-to-month in February. These two declines followed a much larger 10.9% drop in real orders posted in January of this year. Foreign orders in March rose by 2% after falling by 2.2% in February and falling by 10.8% in January. Domestic orders were basically on that same roller coaster, falling by 3.6% month-to-month in March after rising 1% in February and falling by 10.9% month-to-month in January. January was a tough month for German orders no matter where you look; since January, there hasn't been any recovery in German orders.

Sequential Real Orders But the sharp drop in orders in January, just three months ago, sets the stage for the three-month annual rate in orders to decline sharply; it falls at a nearly 40% annual rate compared to a 5.9% annual rate decline over six months and a 1.7% decline over 12 months. Foreign orders and domestic orders show similar progressions as you can see in the table. With the extra drop over three months, it does not make much sense to dwell on whether the declining pattern is sequentially enabled or not.

Real Sales Real sales by sector are less affected by whatever machinations are buffeting orders. Sales across categories fell in March after posting a full slate of monthly gains in February. That followed a near-full-slate of declines in January, with consumer nondurables an exception to the weakness and one that showed enough strength to boost overall consumer goods sales to a gain as well. Sequentially real sector sales show declines on all horizons, a series that barely escapes showing progressive weakness but annualized sales over three months are weaker than sales over 12 months.

Q1 Assessment March completes the orders and sales data for the first quarter; that finds orders falling at an 11.3% annual rate with similar drops for both domestic and foreign orders. Real sector sales in the quarter fall at a 1.8% annual rate on declines across categories except over all consumer sales and consumer nondurable goods sales.

EU Commission Industrial Rankings Turning to broader European data, we find across-the-board negative readings for the EU Commission’s industrial confidence measure for Germany, France, Italy and Spain, the four largest economies in the EMU. Each country shows net negative readings in January, February, and March. Net negative EU Commission readings persist over three months, six months, and 12 months on this gauge. Germany progresses to weaker readings over more recent time periods. France and Spain show less weakness progressively in train. Italy is a mixed case. The queue standings, calculated in the table on the EU Commission data, are below median readings for Germany, Italy and Spain, with only France logging an above-median ranking at its 63.6 percentile near the top third border of its ranked percentile data. All countries show weaker EU Commission readings than in January 2020- underlining how long conditions have been adversely impacted by events. German orders and real sector sales show all components weaker than their January 2020 levels as well.