German industrial orders rise 4.4% in September on car sector rebound

Destatis, the federal statistics office, said the September rise was driven primarily by a 10.5% increase in automotive orders, as activity rebounded following production changeovers and factory holidays that had weighed on orders and output in the previous two months. Machinery and equipment orders rose 8.3%, supported by a large contract in the engines and turbines segment. Orders for other transport equipment fell 10.4%, partly offsetting the gains. That category covers aircraft, ships, trains and military vehicles, and it fell back after unusually large orders earlier in the year.

Destatis reported that new orders fell 10.6% in August. Almost all of that decline came from other transport machinery after unusually large deals in July. Excluding large orders, the August drop was 0.1%. Across June to August, new orders were 1.3% above the previous three months, but 2.6% lower once large deals are excluded.

Order books are full, output is not

Destatis said the backlog of unfulfilled orders rose 0.5% in August from July and stood 10.7% higher year on year. It put the available work at about 9.0 months at unchanged turnover and no new orders. The August increase came from both domestic and foreign markets: unfulfilled orders from German customers rose 0.4%, and those from abroad rose 0.5%. Computer, electronic and optical equipment backlog rose 1.4%, while automotive backlog fell 0.4%. In July, the backlog rose 1.5% on the month and 10.9% on the year, and the 9.0-month reading was the highest since the series began in 2015.

Output was still falling

German industrial output fell 1.1% in July from June on a seasonally adjusted basis, the largest single-month decline in nearly a year, Tech Times reported. Manufacturing production excluding energy and construction fell 2.2%, with capital goods down 3.4% and consumer goods down 2.2%. Intermediate goods edged down 0.2%. Automotive output fell 9.2% on the month. The VDA, Germany's automotive industry association, linked the decline to a production suspension lasting several weeks, which ran longer than seasonal adjustment models had anticipated. Tech Times noted the goods sector makes up roughly one-fifth of the eurozone's largest economy.

Alexander Krueger, chief economist at Bankhaus Bethmann, said the backlog "continues to give reason for joy", according to Reuters. He said the key question was whether companies could convert the large volume of orders into actual production.

One month of orders settles little. The September rebound follows two months in which production changeovers and factory holidays weighed on orders and output. Whether it survives contact with the output data is the open question. The backlog says companies have work to do. The July production figures say they had not yet done it.