As The EUR Jumped In January, German Non-Eurozone Factory Orders Plunged

Tyler Durden's picture

Something funny happened in January as the EURUSD rose from its period low in the 1.26 level: German Industrial Orders imploded as the joint currency strengthened. But not so much for domestic orders within the Eurozone, which actually increased by 0.9% in January (as a reminder, the sole reason mercantilism still works efficiently within the Eurozone is that the Bundesbank, via TARGET2 and the ECB, subsidizes the import economies of the periphery via recycled Current Account proceeds, as shown here). Where the demand collapse came from was non-Eurozone (read China and America) orders which fell a whopping 8.6% in January, after posting a 12.1% rise in December as the EUR was plumbing 2011 lows. As a result, the blended orders rate was down 2.7% on expectations of a 0.6% increase. Does it become clear now why resolving the Greek crisis is not in Germany's interest, as all that would do is send the EUR even higher, and impair German industry - the lifeblood of Europe - even more? Alternatively, does it become clear why Bernanke is just itching to shift the weak currency regime from Europe and back to the US again, with the only thing holding him back being the fear of crude exploding, especially if some Made in Israel bunker busters explode somewhere deep in the Zagros mountains?

More from Goldman on the German industrial collapse:

Manufacturing orders dropped 2.7%mom in January after +1.6%mom (revised down slightly from +1.7%mom initially)


Domestic orders increased by 0.9% after a contraction of 1.8% in December, while foreign orders were down 5.5%mom after +4.3%mom in December.


Orders from within the Euro-zone fell by 0.4%mom after +6.2% in December while orders from outside the Euro-zone plunged -8.6% after +12.1%.


Looking through the usual volatility of the series – which is high - orders were down 3.1% (on the 3m/3m basis).


Orders from within the Euro-area have deteriorated by more in Q4 than from the non-Euro-area (again on a 3m/3m basis, see chart below).


The manufacturing PMI showed a rebound in the new orders component in January from 44.7 after 48.2, and stabilized at that level in February. The correlation between the PMI index and orders is quite high (see chart), and despite monthly volatility, points to some further stabilization in new orders in February.

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Banksters's picture

Tiina Turner just released a  new single.


What's reality got to do with it?  -Who needs a car when a car can be broken

Banksters's picture

The Institute of International Finance on Wednesday added to the list of investors participating in Greece's debt swap. The banking trade group said the 30 members of the Private Creditor-Investor Committee who have so far agreed to participate hold a total of 81 billion euros ($106.5 billion) of outstanding, privately-held Greek debt, or 39.3% of the 206 billion euros of eligible paper.



papaswamp's picture

Germany wants the PIIGS weak and in the Euro...this keeps the Euro weak and Germans working. The trade off is how long can they continue to back up the debt....If one goes down hard, Germany will be in serious trouble.

Moneyswirth's picture

We should let Germany start to build an army again.  Nothing gets a domestic economy going like armament and munitions production. 

What could go wrong?

asteroids's picture

As far as I can tell, very single western government has been lying about their economic numbers since 2008. Eventually, the truth catches up with you.

Village Smithy's picture

The only way to truly get a read on the Chinese economy is to pay attention to data from countries that are importing and exporting with them, and that don't fudge their data(as much). Exhibit A-Germany.

miker's picture

No, the "bending" of data and stats has simply gotten stronger and meaner; perhaps outright lying now in the US.  Germans pretty much telling the truth for now, but that'll change as things get worse.

This is all Geitner's lead.  He is trying to singlehandedly right the ship he ran aground.

disabledvet's picture

this is a big deal because "this isn't any hard data" this is THE hard data. i did see Spanish numbers just passing by as well and they were awful. talk to the State of Ohio: "you don't just rebuild industrial production." only deep well oil rigs and semi-fab plants require greater capital expenditure "up front" so any type of industrial..."collapse" can take decades to recover from...if ever. And since we're talking very few places on the planet capable of such "largesse" to begin with (US mid-west/Northern Germany/Northern Japan/Korea) the failure of any one of these is a true advantage to the others. combine this data with Fukushima and i think you can see how/why among certain Wall Street people (General Electric comes to mind) "they are VERY bullish in here."

whoisjohngalt11's picture

very good article thanx..

RSloane's picture

Germany's economy contracted last quarter. It is expected to have contracted again this quarter along with other nations comprising the EU. There are recession-like indices peppering the EU, including Germany, yet the game on illusion is that all is well and Germany will remain an economic engine that will prop everyone else up.

neverm0re's picture

I guess that's the reason Germany's medium size businesses, the main exporters, almost unanimously want Greece out of the Eurozone, then.