Germany: Good order figures with one blemish

Commerzbank Corporates & Markets
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Economic Briefing
Germany: Good order figures with one blemish

Germany’s industrial orders surprised on the positive side in March by rising 2.2% on the previous month. Consequently, the basis trend in orders is slightly upwards again. The one flaw in these otherwise good figures is the sharp fall of domestic core capital goods orders, which could indicate a lower willingness to invest again.

After several negative surprises, a key economic figure from Germany has now brought a positive surprise. Instead of the generally expected decline, order intake in March rose by 2.2% on the previous month. Without the always very volatile orders from the “other vehicles” segment (rail, aircraft), significantly more orders came from the domestic economy, the euro zone and beyond.

In our briefing last month, we pointed to an emerging trend reversal for domestic orders; its steady decline in the course of last year had shown how much the uncertainty from the sovereign debt crisis had curbed economic growth in Germany. This trend reversal in domestic orders (again without “other vehicles”) was confirmed convincingly in March (see chart). However, after their sharp rise in past months, core capital goods orders – i.e. without cars – have dropped considerably again in March after a having strongly increased since fall 2012. This could be a sign that the renewed greater uncertainty among businesses, shown by sentiment indicators, could have reduced the willingness to invest again. This increases the risk that we might have to wait a little longer for a sustained revival of the German economy.

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