Economy in Brief

The year-over-year chart of German order growth rates puts in context some of the wild changes in growth rates we've seen month-to-month over the past three months or so. But the chart makes clear that the year-over-year trends haven't changed very much although there's been a great deal of monthly turbulence recently. In June, orders jumped 7.6%. In July, they fell by 11.3%. In August, they rose by 3.9%. On balance, over this period there hasn't been much change in orders, but the monthly turbulence has been tooth-rattling.

Sequential growth rates aren’t particularly telling either, with 12-month growth at -4.4%, the six-month annualized growth rate at -11.3%, and the three-month growth rate stands at -3.1%. All these statistics show that over all the periods orders are declining, but there's no clear trend beyond that. Foreign growth shows some wild swings from -5.1% over 12 months, to -12.5% over six months, then jumping to +6.7% over three months (all annualized). Domestically there is deterioration as the 12-month growth rate of -3.2% gives way to a -9.3% pace over six months which then gives way to -15.4% pace over three months. The domestic picture is worth keeping an eye on.

Sector sales, adjusted for inflation, generally show declining trends and a tendency toward progressive deterioration apart from consumer durables and intermediate goods. For all the manufacturing, sales rise by 0.8% over 12 months, fall 1.9% over six months and then the drop accelerates to -7.2% over 3 months, a clear deteriorating pattern. So while the order patterns are indeterminate except for domestic growth, demand conditions are clearly worsening - the trend for demand shows the clear deterioration.

Industrial confidence for selected large European economies shows negative numbers and a worsening for the recent months apart from Spain and, even that is a minor exception. The averages for industrial confidence measures over 12 months, six months and three months are negative and show deterioration on those timelines.

Quarter-to-date trends are broadly negative with two months of quarterly data now available. For the European industrial data, the table presents instead of quarterly changes the queue percentile standings and here the standings are in the lower 30th percentile for three of the four countries with Spain logging a stronger 41-percentile standing.

French manufacturing production fell by 0.4% in August, reversing a 0.4% increase in July after falling by 0.9% in June. Manufacturing in France shows a steady string of declines falling by 1.1% over 12 months, falls at a 0.7% annual rate over six months and accelerates that decline to a 9.7% annual rate drop over three months.

Sector trends- The output of consumer goods, however, shows mixed trends. Durable goods output moves in the other direction with consumer durables output up by 4% over 12 months, up at a 13.8% annual rate over six months and rising at a 16.8% annual rate over three months – a clear, strong, accelerating path. On the other hand, however, consumer nondurables output continues the weak streak that we see in the headline, falling by 2.7% over 12 months, falling at a 4.4% annual rate over six months, and falling at a 2.4% annual rate over three months. Capital goods output is declining in August on a month-to-month basis. But it rises by 3.8% over 12 months, accelerates to a 4.2% annual rate over six months, then drops back to gain at only a 2.5% annual rate over three months. Clearly, the sector that's driving negative industrial output overall is intermediate goods where output logs a 5.9% decline over 12 months, a decline at a 4% annual rate over six months and a decline at a 12.8% annual rate over three months.

The quarter-to-date- Data are up to date through August, so the quarter-to-date calculations are for two months into the third quarter. On that basis, output is falling at a 0.1% annual rate, consumer durable goods output is falling at a 1.3% annual rate in the quarter, consumer nondurable goods output is rising at a 1.2% annual rate, capital goods output is rising at a 3.8% annual rate, and intermediate goods production is falling at a 6.4% annual rate. Output trends in the quarter clearly have mixed characteristics; in fact, in the quarter-to-date numbers seem quite different than the trends that we see sequentially over 12-months to six-months to three-months.

Auto registrations- The registration (and, presumably, the purchase) of automobiles fell by 2.5% in August after rising 3.2% in July and falling by 2% in June. Sequentially registrations are mostly weak, falling by 2.8% over 12 months, rising at a 7.4% annual rate over six months, and then falling at a 5.3% annual rate over three months. However, this pattern compared to the second quarter base still generates a 15.1% annual rate gain in the quarter-to-date with two months of data into the third quarter.