German factory orders rise strongly in September, industrial production likely to have dropped

Order intake in Germany’s manufacturing sector grew solidly in September by 1 percent on sequential basis. The prior month’s data has been upwardly revised to a rise of 4.1 percent. Confidence among manufacturing firms has been excellent for a long time. Admittedly, the September figure gained from a palpable rise in the always very volatile orders in the “other vehicles” sector. However, even with this sector factored out, rise of 0.5 percent sequentially remains. Given the large plus in August, this outturn is excellent, noted Commerzbank in a research report.

However, the production data for the month of September is unlikely to be so strong, given that sales in September dropped 1.8 percent sequentially, which is in line with the projection of a 2 percent fall in production, stated Commerzbank.

However, this was just a countermovement after the sharp rise in August that had gained from a special effect. In the following months, production is expected to accelerate noticeably again. The trend calculated for industrial production based on order index in the past months is now pointing upwards. This underpins the anticipation that the German economy will grow in the fourth quarter at a pace similar to the one witnessed in 2017 to date, added Commerzbank.

The order intake figure for September signals another sharp rise in industrial production in months ahead; however, the September figure on a sequential basis is likely to record a decline.

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