Only small drop in German new orders

German new orders decreased in December, dropping by 0.5% MoM, from a 2.4% increase in November. On the year, new orders are still up by a strong 6%. The December drop was driven by weaker domestic and non-Eurozone demand. Interestingly, new orders from other Eurozone countries increased by 7.5% MoM. German new orders have been on a zig-zag trend for almost two years. In this regards, today’s decline is actually good news. Why? Recently, strong monthly increases were always followed by strong declines the month after. Today’s small drop confirms the upward trend for the German industry. Order books are gradually filling. Combined with the low level of inventories, industrial production should gain more momentum in the coming months, hopefully closing the current wide gap between euphoric confidence indicators and rather sluggish hard data.