PRESSEMITTEILUNG | German new orders: Exaggerated pessimism about China.
01/07/15 | Bottom line: German companies are back. New orders in the manufacturing sector rose another strong 1.5% mom in November after +1.7% in the previous month. As indicated by the demand component from outside the eurozone, the widespread pessimism on emerging markets and especially China is largely exaggerated. With plus 1.4% mom in November, it rose strongly for the third consecutive month. Demand for intermediate goods (ex EMU) which is a good proxy for what is in the pipeline even jumped by more than 3% and hit its highest level in more than a year. As icing on the cake, domestic new orders continued to rise as well.
German new orders in the manufacturing sector rose 1.5% mom in November (Consensus: +0.1%). It was the second strong increase in a row after being up 1.7% in the previous month. On a two-months average basis (October-November), new orders increased an impressive 1.2% compared to the third quarter. Both domestic and foreign demand rose in November by 2.6% and 0.6%, respectively. These figures were not inflated by big-ticket items, as bulk orders remained slightly below average.
Given increasing concerns about emerging markets and especially the Chinese economy, today’s figures are highly relevant – and illustrative! To cut a long story short, the widespread pessimism, especially on stock markets, is largely exaggerated. Instead of further steep plunges in foreign demand for German exporters, it looks as if there is a turnaround. Here are the relevant data in more detail on which pessimists should chew over.
– As just mentioned, the headline foreign new orders figure rose 0.6% mom in November after an already strong plus of 1.9% in the previous month. All signs now point towards an impressive year-end rally in foreign demand.
– More important these days is probably foreign demand from outside the eurozone. With plus 1.4% mom in November, it rose strongly for the third consecutive month (October: +1.5%; September: +1.3%). It is true that not only emerging markets but also the US could be behind this turnaround. However, given the extent of the decline over the summer months (nearly minus 14% from June to August), the swing factor should primarily have been emerging markets.
– Although foreign new orders from EMU were slightly down in November (-0.5%), the upward trend in recent months remains intact (October: +2.6%). Looking at the details and going forward, we think that the best is yet to come from the eurozone. Demand for intermediate goods which is a good proxy for what is in the pipeline jumped by more than 3% and hit its highest level in more than a year.
– In case you wonder, domestic demand also held up well in November. It was up 2.6% after +1.4%. As icing on the cake, the intermediate goods sector skyrocketed by 6% mom (non-annualized) and hit its highest level since August 2011.
Tomorrow, the industrial production figure for November will be released. We expect a plus of 0.7% mom.
Dr. Andreas Rees
Chief German Economist
Corporate & Investment Banking
UniCredit Bank AG
Taunustor 1-3 – 8060MR4F
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