German Factory Orders Unexpectedly Declined in July on Exports
German Factory Orders Unexpectedly Declined in July
Michele Tantussi/Bloomberg
Daimler said yesterday that sales at its Mercedes-Benz unit surged 22 percent in August on increasing demand in China.
Daimler said yesterday that sales at its Mercedes-Benz unit surged 22 percent in August on increasing demand in China. Photographer: Michele Tantussi/Bloomberg
German factory orders unexpectedly fell in July as demand in the euro region weakened, indicating the recovery in Europe’s largest economy is losing momentum.
Orders, adjusted for seasonal swings and inflation, declined 2.2 percent from June, when they surged a revised 3.6 percent, the Economy Ministry in Berlin said today. That’s the biggest drop since February 2009. Economists forecast a 0.5 percent gain, according to the median of 40 estimates in a Bloomberg News survey. From a year earlier, orders climbed 18 percent, when adjusted for working days.
Evidence of slowing growth comes after the German economy expanded at the fastest pace in two decades in the second quarter, boosted by exports. An index of manufacturing fell in August and investor confidence dropped to a 16-month low. Still, Daimler AG, the world’s second-biggest manufacturer of luxury cars, said yesterday that sales jumped in August.
“It’s a sign that Germany can’t decouple from the global economy,” said Alexander Koch, an economist at UniCredit in Munich. “While this is a backlash against last month’s surge and monthly figures can be volatile, the economy simply can’t continue to grow at the same pace as in the first half of the year.”
The euro extended its decline against the dollar after the report and was at $1.2750 as of 12:03 p.m. in London, down 1 percent on the day.
Export Drop
The June data was revised up from an initially reported 3.2 percent gain, following “substantial large orders” in the shipping and aviation industries, the ministry said. Big-ticket orders were “below average” this month, it said.
Export orders dropped 3.7 percent in July from June, driven by a 6.1 percent decline from the 16-member euro-region economy, the report showed. Domestic sales fell 0.3 percent. Demand for investment goods dropped 5.5 percent and orders for consumer goods fell 1 percent.
Germany’s economy may struggle to gather strength as the global recovery shows some signs of weakening and European governments cut spending to push down budget deficits. While order books remain full for now, “there are signs of cooling,” the head of the BGA wholesalers and exporters group Anton Boerner said today in Berlin.
“We’re watching the fourth quarter carefully because there are economic uncertainties,” Boerner said, citing concern about a “double-dip” recession in the U.S.
Euro Boost
In the first half of 2010, Germany benefited from Europe’s sovereign debt crisis, which has pushed down the euro 11 percent against the dollar this year. This boosted demand for German goods by making them more competitive outside the 16-member region.
German plant and machinery orders jumped 48 percent in July from a year earlier, the Frankfurt-based VDMA machine makers’ association said on Sept. 1. Export orders surged 54 percent.
Daimler said yesterday that sales at its Mercedes-Benz unit surged 22 percent in August on increasing demand in China, Germany and the U.S. Hochtief AG, Germany’s largest builder, on Aug. 16 raised its order outlook for this year.
The Bundesbank said on Aug. 19 that the pace of German growth “will normalize” in the second half with a global expansion set to “moderate.” The bank’s president, Axel Weber, told CNBC in an interview broadcast on Aug. 27 that fiscal consolidation remains a “continuing challenge” in Europe.
“We are bordering on a self-sustaining recovery in Europe and there is not much concern about a renewed recession,” Weber said. “The recovery is on track, with not as high growth as before, but moderate growth going forward.”
To contact the reporter on this story: Gabi Thesing in London at gthesing@bloomberg.net
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