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Germany Factory Orders SA

By:

Crown Forex

2008-07-10

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Previous -1.7%
Forecast 0.5%

Definition

The index reports the volume of orders and reported as a percentage change from the previous month. The index accounts new orders of durable and non-durable goods, shipments, unfilled orders, and inventories as reported by domestic manufacturers.

The report is not widely watched and has a slight effect on markets, as it is considered a lagging indicator; especially since Durable Goods which represents more than half of the total factory orders leaves it not much watched, moves market timely if we saw huge revisions to the reported durables reading.

General Effect

In the case the factory orders index shows an increase in factory orders quantity that means increasing raw materials quantity that are needed by factories to complete and activate production operations in target to increase the produced quantity of durable and non durable goods. Accordingly factories will be able to accommodate increasing consumers' demand for goods and products which is moved by changes on their economic conditions such as income level, consumption and expenditures, then as a result factories production capacity will enhance and affect the entire economic circle positively leading to accelerated growth and strengthening the local currency.

Factory orders has an effect on the currencies market significantly because it does reflect the production capacity for the entire economy, so the importance level for this indicator is considered moderate.

In respect of factory orders effect on the stock market in most cases it doesn't leave any obvious effect at stock indices, so if the factory orders percentage change rise it will leave a positive impact on industrial companies shares which affect the whole stock market positively, but it will be balanced with increasing consumers demand on different goods and products as an out come of changes in consumers directions to spend more money and increasing consumption levels instead of investing that amount of money in the stock market.

Best Case    A positive incline in the the factory orders rate as it is forecasted or even above shows that there's an incline in the consumption since factories will produce more which will boost of course an economical growth

Worst Case    If the reading comes in negative, that will show that the consumption of durable and non durable goods has declined encouraging companies to produce less which as a result will negatively impact growth

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CROWN FOREX SA, located at St-Hubert 38, 2854 Bassecourt, P.o.box 247, Switzerland, is fully regulated as a financial intermediary under Swiss federal law on the prevention of money laundering (LBA, MLA). Our company is also affiliated with the ARIF association, thus overseen by the Swiss federal ...

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