(Reuters) -German industrial orders fell significantly more than expected in August, adding to signs that manufacturing in Europe’s largest economy will not recover in the coming months. Furthermore, the German industrial orders slump reflects broader challenges facing the manufacturing sector. #GermanIndustrialOrdersSlump
Orders fell by 5.8% on the previous month on a seasonally and calendar adjusted basis, the federal statistics office said Monday.
A Reuters poll of analysts had pointed to a fall of 2.0%.
“Today’s data confirm that demand for German industrial goods has continued to weaken,” Commerzbank’s senior economist Ralph Solveen said. “This suggests that the German economy will at best stagnate in the second half of the year.”
A revival is not expected until next year and even this is likely to be very modest, Solveen said.
One reason for the negative result in August was the large orders for transport equipment, including aircraft, ships, and military vehicles, placed last month.
Excluding large-scale orders, new orders in August were 3.4% lower than in July.
The statistics office revised the all-items figure for July to a 3.9% increase from a previous figure of 2.9%. This revision resulted from establishments reporting a considerable volume of late orders.
The less volatile three-month on three-month comparison showed that new orders were 3.9% higher in the period from June to August than in the previous three months.
Of all the G7 nations, Germany has the highest share of exports in its gross domestic product and is highly dependent on orders from abroad, said Thomas Gitzel, chief economist at VP Bank.
“If these fail to materialise, the entire economy suffers,” Gitzel said.
Foreign orders fell by 2.2% on the month. Orders from outside the euro zone increased by 3.4%, whereas orders from the euro zone dropped by 10.5% on the month.
“As long as incoming orders are weak, the German economy will continue its dry spell,” Gitzel said.
Indicators point to weak demand in the coming months. #GermanIndustrialOrdersSlump
Addressing the Impact of the German Industrial Orders Slump on Economic Growth
Ultimately, the German industrial orders slump may impact economic growth. Policymakers need to address these concerns to restore confidence. Therefore, a focused approach on boosting domestic demand could help stabilize the situation.
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