Factory Orders Even Weaker Than Headline Reading Suggests

German factory orders missed expectations in November, at +0.3% M/M seasonally/calendar adjusted (1.1% cons, -3.8% prior, revised from -3.7%) and -4.4% Y/Y on a calendar-adjusted basis (-3.4% cons, -7.3% prior, no revisions).

• Excluding one-off big ticket items, "core" new orders declined -0.6% M/M, the 3rd consecutive monthly drop, with the less volatile 3M/3M measure falling -1.4%. The level of core orders is now the lowest since the pandemic.
• Looking at individual components, investment goods and consumption goods orders grew at +0.8% M/M and +1.1%, respectively. Intermediate goods saw a decline of -0.4% M/M.
• Looking at a geographical split, domestic orders climbed by +1.4% M/M, up for the 2nd consecutive month, potentially indicative of domestic demand stabilising at weak levels. Foreign orders declined -0.4% M/M, driven by Eurozone orders falling -1.9% (non-Eurozone at +0.6% M/M), though it's worth noting that in a separate release, German exports surprised to the upside in November.
• Even though the headline suggests fairly stable activity compared to last month, the underlying "core" measures rather point towards ongoing weakness in German industrial activity.
• Indeed, real turnover in manufacturing fell -0.7% M/M, pointing to potential downside risks in Tuesday's industrial production data (+0.3% M/M expected, after -0.4% in Oct).

Source: Destatis, MNI