Disappointing new orders data for April are no reason to worry, as they are the result of seasonal rather than structural effects.
German new orders disappointed in April with a sharp drop of 2.1% MoM, from 1.1% MoM in March. On the year, and working day adjusted, new orders were still up by 3.5%, from 2.5% in March. In particular, foreign orders disappointed, dropping by more than 3% MoM. Domestic orders remained almost stable.
At first glance, these disappointing April data seem to be at odds with buoyant confidence indicators and are anything but a good start to the second quarter. At second glance, however, weak new orders data look like the result of this year’s timing of Easter. No reason to worry. Order books are still richly filled to ensure good production data in the months ahead and earlier episodes have shown that vacation and holiday driven delays will eventually be recovered. It only takes a while.