New orders recover in February but still fall short in matching buoyant sentiment indicators
German new orders have woken up from hibernation, increasing by 3.4% MoM in February, partly offsetting the January shock of a 6.8% MoM drop. The increase in new orders was exclusively driven by stronger domestic demand. Foreign demand remained stable. A bit worrisome is the fact that new orders from other Eurozone countries have dropped for the second consecutive month. The surge in new orders from other Eurozone countries at the end of last year has now entirely vanished into thin air, adding a slightly disappointing note to the current picture of a Eurozone recovery.
Obviously, new orders have always been volatile but the fluctuations and size of volatility since late-summer have been almost unprecedented. German order books seem to be extremely moody, reacting sensitively to seasonal and weather moods. Looking through this high volatility, the trend for order books is slightly positive, though still not as positive and strong as current confidence indicators are suggesting.