Still zig-zagging. Festive cheer is lacking as new figures show German new orders disappointed in October, dropping by 2.2% MoM, from a 3.1% increase in September. On the year, new orders are still up by 1.9%. The drop was broadly driven by weaker foreign and domestic demand.

German new orders have been on a zig-zag trend for more than a year. Over the last year, there were only two consecutive months in which new orders increased: February and March of this year. For the rest, strong months were followed by disappointments. Still, the underlying trend is slightly positive. Since the beginning of the year, new orders have now increased by roughly 5%. Combined with the low level of inventories, industrial production should remain growth-supportive in the coming months.

A closer look at the composition of new orders, however, provides further arguments for the proponents of more domestic investment in Germany. While domestic orders have increased by 3.4% since the beginning of the year, foreign orders are up by more than 10% (despite sluggish demand from other Eurozone countries).

Earlier today, the German statistical agency released details of Q3 trade data. Remember that in the third quarter net exports were not a growth driver. The details revealed interesting information. Particularly the French stagnation is leaving its marks on German exports. France is still Germany’s most important trading partner, but the gap vis-à-vis other countries is narrowing. In the third quarter, 8.9% of all German exports went to France, 8.3% to the US. Between 1999 and 2002, more than 11% of all German exports went to France. Returning to the latest figures, it is noteworthy that three out of the top 5 German export destinations are countries outside the Eurozone (US, UK and China). The decoupling continues.