Some rays of sunshine. German new orders increased by 2.3% MoM in February, more than offsetting January’s drop of 1.6%. On the year, new orders have finally left the territory of negative growth rates for the first time since December 2011. The February increase was widely-spread across all sectors. Orders of capital goods increased by 3.5% MoM. Interestingly, the strongest increase came from domestic (+2.2% MoM) and non-Eurozone (+2.7% MoM). Orders from other Eurozone countries increased at a slower pace and are still down by almost 2% on the year.
German new orders have been on a zig-zag trend for almost one year. The last time new orders increased for two consecutive months was in February and March last year. Therefore, today’s increase is good news, as it shows that the industrial backbone is not running out of steam, but it is no reason to become overly cheerful.
Looking ahead, with the solid labour market and surprisingly strong retail sales, domestic demand should be an important growth driver this year. In addition, the pick-up in non-Eurozone demand shows that the German economy benefits from the gradual recovery of the global economy. In this context, today’s new order data add to the evidence that the German economy’s decoupling from the rest of the Eurozone is continuing.