German Orders Make Strong Jump, but from a Too-Deep Hole

Summary

• German total orders show improved year-over-year growth over 12 months but exhibit a weakening trend on shorter horizons.
• The six-month growth rate for total orders fell to -4.7% from 3.3% over 12 months, then dropped further to an -11.9% annual rate over three months.
• Foreign orders improved to +0.2% over 12 months from -2.5% a year ago, but the six-month rate degraded to -13% before rising slightly to -12.1% over three months.
• Domestic orders jumped to a 7.9% growth rate over 12 months from -1% a year ago, rose to 9.1% over six months, then fell sharply to -12.1% over three months.
• Total foreign order growth for the third quarter fell at an 11.8% annual rate while domestic orders surged at a 21.8% annual rate, pushing total orders up by only 0.7% annually.
• Year-over-year total order growth holds a 58.2 percentile standing, driven by domestic orders at an 82.8 percentile standing against foreign orders at a 38.1 percentile standing.
• Real sales increased by 0.2% in September after a 0.1% rise in August, following a 1.4% drop in July.
• Sequential real sales growth fell from 1.8% over 12 months to -2.5% over six months, then to -4.1% over three months.
• Manufacturing sales growth rates are nearly identical to those for mining and manufacturing.
• EU industrial confidence improved in September for Germany, Italy, Spain, and the EMU average, while France declined from -3.3 in August to -5.3 in September.
• Germany's industrial confidence index improved sequentially from -15 over 12 months to -12.4 over six months, then to -10.6 over three months.
• Germany's September industrial confidence reading sits at a 45.7 percentile standing, while Italy is at 52.6, France at 59.7, and Spain at 76.8.
• Compared to a year ago, Germany and Italy show improved industrial confidence, while France and Spain show deterioration.
• The German economy faces an uncertain future due to the war in Ukraine, unsettled conditions in Iran, elevated oil prices, and supply line interruptions.
• Central banks are raising rates, with the Bank of England offering a rate hike and warning of further increases.
• Investors are analyzing the implications of unexpected Republican losses in U.S. midterm elections on global policy.
• Market reactions to U.S. political developments have been positive so far, with markets potentially favoring political impasse.