German Factory Orders Slide, Cause for Concern in Germany
Yesterday we previewed German factory orders report highlighting its importance considering German consumers have not been spending despite an improving labor market. That puts more emphasis on the manufacturing sector in supporting the overall economy.
The factory orders data showed orders sliding 4.8% in November, which was weaker than expectations of a 1.6% decline. While it follows a very strong 5% increase the previous month’s indication that demand for German goods waned in the middle of the fourth quarter. It was the biggest drop in orders in 3 years.
On the year, orders fell 4.3% following a 5.2% gain in October.
From Bloomberg: “Orders from euro-region nations fell 4.1 percent from October, when they rose 8.2 percent, today’s report showed. Orders from outside the currency union slumped 10.3 percent, while domestic orders slipped 1.1 percent. Demand for investment goods fell 6.5 percent in the month, while declining 2 percent for consumer goods.”
Bloomberg quote above we see that foreign demand expected with orders from the euro region down modest. Domestic orders were also weaker but not to the same percentage. week orders likely means weaker manufacturing production for December and early part of 2012. We’ll continue to monitor this very important sector for Germany in the coming months.
For the most part the data did not have a major impact on the EUR/USD pair with the pair holding below the 1.28 area it reached in Thursday’s session, as we await the very important US nonfarm payroll report.
Wider Euro-Zone Sees Soft Sales, High Unemployment Rate
in the wider euro zone we see retail sales down 0.8% the month of November which was lower than expectations. That follows four retail sales data from Germany. At the same time we see the unemployment rate remaining at 10.3%. Overall that shows the soft state of the euro zone economy and will put more pressure on the ECB to either lower interest rates further from 1% or to use further unconventional monetary tools to help the recovery and avoid recession.