- Economy ministry reports 1.4 percent decline in orders
- Non-euro area orders slump as China drags on global growth
German factory orders fell more than expected in July, signaling that growth in Europe’s largest economy may yet be bumpy.
Orders, adjusted for seasonal swings and inflation, dropped 1.4 percent after increasing a revised 1.8 percent in June, data from the Economy Ministry in Berlin showed on Friday. The typically volatile number compares with a median estimate of a 0.6 percent decline in a Bloomberg survey. Orders unexpectedly slid 0.6 percent from a year earlier.
German exporters are exposed to a potential cooling of global trade as China’s economy slows, meaning companies may have to rely more on domestic demand. Even so, the country is poised for “solid” growth, supported by record-low unemployment and rising wages, the Bundesbank said last month.
Export orders dropped 5.2 percent in July as domestic demand climbed 4.1 percent, the Economy Ministry report showed. Orders from outside the 19-nation euro area slumped 9.5 percent, and orders from within the currency bloc rose 2.2 percent.
Orders for consumer goods fell 6.3 percent, investment goods orders shrank 1.6 percent, and basic goods orders slid 0.2 percent.
The European Central Bank downgraded its growth forecasts for the euro area on Thursday, with President Mario Draghi citing a slowdown in emerging-market economies.
Volkswagen AG, which aims to become the world’s largest automaker by 2018, said on Aug. 25 that global sales slipped in July amid turmoil in key markets. Airbus Group, which assembles most of its single-aisle planes in Hamburg, postponed delivery of its A380 super jumbo to Russia as lower oil prices and sanctions over the country’s annexation of Crimea weigh on the economy, crimping flight bookings.
Still, machinery orders jumped 18 percent in July from the previous year, the VDMA engineering trade group said this week. A Purchasing Managers’ Index shows German manufacturing activity accelerated in August. Unemployment declined and the jobless rate remained at 6.4 percent, the lowest level since reunification.