The ups and downs of forecasting

I don’t know about you, but I am getting a little weary with alternating good and bad news from the global manufacturing countries and on a micro scale individual manufacturing companies.

As an example; the manufacturing economy news from Germany has swung wildly from very bad to miraculous recovery, back to bad in just a few short months. Back in June at LASYS in Stuttgart I heard a Federal Government Minister singing the blues about the sorry state of the Mittelstand in Germany not being able to compete with their opposite numbers in China. He was all gloom and doom as were several industry leaders at a later press conference. And just a month later German business confidence was up.

I don’t know if you have ever done the following but I did as it occurred to me that this economic reporting had weaknesses so I simply have listed references’ that I saved as background for my Annual Economic Review of the industrial laser market. I have inserted directional arrows to reflect my emotional ups and downs. I am not picking on Germany but it is a world leader in the production and use of industrial lasers, so it serves as an interesting example

German Industrial Orders Show Weak Growth (AP - January 22) ↓
German Manufacturing Orders Unexpectedly Declined in December
(Bloomberg February 4) ↓
German Manufacturing Orders Extend Record Plunge (Bloomberg March 11)↓
German manufacturing gauge climbs to record high (Market Watch April 22) ↑
German manufacturing orders surged in March signaling rate of Germany’s recovery is gathering speed (Fin Facts May 6) ↑
German Manufacturing Orders Look Strong (Seeking Alpha June 7) ↑
German Manufacturing Orders Fall (WSJ July 7) ↓
German Business Confidence Up In July (AP July 23) ↑
Unexpected Decline in German Manufacturing Output (RTT News Aug 6) ↓
German manufacturing orders drop 2.2% in July (Market Watch Sept 15) ↓

So, should I panic in October or just wait for another economic news reversal? I had a mentor who taught me more about economic forecasting then I ever learned in my university days. I shall always remember his caution, “Look at a forecast as a snapshot in time. It’s what you see today and it will change tomorrow.”