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Article / 06 October 2014 at 4:02 GMT

3 Numbers: German factory orders sluggish, Eurozone mood, US jobs

editor/analyst /
United States
  • German factory orders figure likely to confirm bleak Eurozone outlook
  • Sentix investor confidence index will add to Eurozone gloom
  • Conference Board Index will give more evidence of good news for US

By James Picerno

Monday is a slow day for economic releases, so today’s update on industrial orders for Germany will be the main event for macro news in Europe. Later, Sentix's monthly report on investor sentiment for the Eurozone will likely reaffirm the deteriorating mood. 

We’ll also see new US data for the Conference Board Employment Trend Index, which will probably offer a deeper level of confidence for expecting continued growth in the labour market in the wake of Friday’s encouraging payrolls report for September.

Today's data on Germany's factory orders are unlikely to repeat the
positive numbers from July. Photo: Thinkstock 

Germany: Factory Orders (06:00 GMT) Today’s numbers on new industrial orders for Germany will be read as a proxy for deciding if Europe’s stumbling economy is headed for even rougher waters in the final months of the year.

The previous release offered a round of upbeat data for the Eurozone’s biggest economy: orders jumped 4.6% in July, a welcome change after two straight monthly declines. But the figures revealed that a key reason for the revival was a surge in orders from outside the single currency area. Within the Eurozone, orders rose a relatively sluggish 1.7% in July.

Nonetheless, the July report suggested that the blowback from the Russian-Ukrainian crisis has been muted for Germany so far. But recent survey data suggests that July’s rebound in orders was a one-off event. Manufacturing activity was virtually flat last month, according to the Markit/BME Germany Manufacturing Purchasing Managers' Index (PMI). 

The benchmark slipped under the break-even 50.0 mark in September for the first time in more than a year. “September’s manufacturing PMI results paint a worrying picture of the health of Germany’s goods-producing sector,” said the economist in charge of the report at Markit.

The latest PMI numbers are a sign that Germany’s usually dependable growth may be in jeopardy. We’ll have a better picture of what’s in store for this critical Eurozone economy after seeing today’s hard data on industrial demand. But given the overall backdrop in Europe these days, it’s likely that the numbers du jour will strengthen the case for managing expectations down another notch.


EU: Sentix Investor Confidence (08:30 GMT) It’s hardly a surprise to see this mood metric tumble sharply in recent months, although the degree of the downturn is still breathtaking. As recently as July, the Sentix data was firmly in positive territory, but as we now know, the relative optimism turned out to be a prelude to a dramatic reversal. Indeed, this survey of nearly 4000 investors (of which roughly one-quarter are institutional) sunk to a negative 9.8 last month. The depth of the slide “signals a renewed recession for the Eurozone", Sentix warned last month.

Data published from other sources in the weeks since that Sentix release don’t look quite so alarming, although it’s still hard to find numbers that convincingly refute the forecast that Europe’s headed for a new phase of contraction. Indeed, the September estimate for Eurozone GDP continues to slide, according to the Bank of Italy’s latest update of its Euro-Coin Indicator. 

This monthly measure of economic activity slipped to 0.13 last month. Although that’s still marginally positive, it’s the lowest reading in a year and the downward momentum of late strongly implies that Eurozone GDP will contract in the near future. The weekly releases from over the past month offer marginally better estimates for Eurozone’s third-quarter GDP, although Friday’s revision dipped a bit – the first lesser number since August.

At the very least, economic stagnation for the near term looks like a fait accompli. Today’s Sentix update for October will probably reinforce the case for anticipating that the Eurozone is headed for a rough autumn.


US: Conference Board Employment Trend Index (14:00 GMT) Payrolls in September delivered a reassuring rebound after August’s tepid gain. The US economy added 248,000 jobs last month, a healthy improvement over the upwardly revised increase of 180,000 for the previous month. “This report was strong across the board,” the chief US economist at Barclays noted. “The labor market continues to grow fast enough to keep pushing the unemployment rate down.”

It's easy to be optimistic about the US in the wake of Friday’s report. Just one month ago, the trend looked considerably weaker due to surprisingly soft employment data in the preliminary figures for August. Yet it’s interesting to note that the Conference Board’s broader measure of employment barely flinched. 

This benchmark’s methodology of aggregating a broad range of data for the labour market offers a more durable estimate for measuring job creation in the US. As such, it’s a useful data set for minimising the short-term noise.

On that note, today’s monthly release will likely deliver more of the same. The economy continues to mint jobs at a steady pace. That’s been clear all along, according to the Employment Trend Index, even if some analysts were inclined to cherry pick the numbers and argue otherwise.


– Edited by Robert Ryan

James Picerno is a macro analyst/editor at


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