GERMAN DATA
German factory orders surprised to the downside in September, at -5.8% M/M (vs -2.0% cons). July's upwardly revision of 1.0pp to +3.9% prior does not overshadow that the 'core' index value printed another cycle low. Some decline was expected after August's index was pulled up by one-offs in the "other vehicle" sector, but there also was an underlying deterioration. While August's decline was almost purely foreign-driven, the overall picture remains very weak; sentiment also deteriorated again recently.
- The yearly comparison also came in below expectations at -3.9% (vs -1.6% cons; +4.6% prior, revised from +3.7%).
- Looking at underlying 'core' orders (excl. large-scale one-offs), they fell 3.4% M/M. On a 3m/3m basis, the trend remained positive but tapered down a little, to +0.8% (vs +1.0% prior).
- The decline was almost purely foreign-driven, with EZ orders more than reversing their July increase while non-EZ orders saw a smaller M/M fall. Domestic orders remained largely flat (details see table). Over the last three months, both foreign and domestic 'core' orders have increased a little.
- The sequential comparison across sectors shows the main categories being a bit mixed, but overall weak. Non-durable orders stand out positively at +3.0% (vs -7.7% prior), while durable goods, at -7.9%, printed below each month of the pandemic except March 2020, and stand at levels already seen in mid-2011.
- Real turnover in manufacturing, which can provide some signal for the August industrial production release (due tomorrow), was +3.2% M/M and -3.1% Y/Y. Current consensus for August IP stands at +0.8% M/M (vs -2.5% prior) and -3.9% Y/Y - so there may be some upside risks to tomorrow's print.
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