German Factory Orders Fell in May as Greece Damped OptimismPaul Gordon
German factory orders fell in May in a sign that companies may have held back as Greece’s debt crisis cast a cloud over the euro area’s economic recovery.
Orders, adjusted for seasonal swings and inflation, slid 0.2 percent after rising 2.2 percent in April, data from the Economy Ministry in Berlin showed on Monday. The typically volatile number compares with a median estimate of a 0.4 percent drop in a Bloomberg survey. Orders increased 4.7 percent from a year earlier.
German economic confidence has been waning as Greece’s failure to agree bailout terms with its creditors takes it close to a formal debt default that could splinter the euro area. Even so, an index of economic activity in the currency bloc is at a four-year high and the Bundesbank last month raised its forecast for Germany, citing a strong labor market and consumer spending.
“The evolution of the Greek crisis will affect the behavior of the euro-area economy over the near term,” said Marco Protopapa, an analyst at JPMorgan Chase & Co. in London. Even so, euro-area data are “reassuring about the strength of the underlying momentum,” he said.
Domestic factory orders dropped 0.6 percent in May as export orders rose 0.2 percent, the report showed. Investment-goods orders slid 0.8 percent and consumer-goods orders fell 1.2 percent. Orders for basic goods rose 1.3 percent.
Measures of optimism among business leaders, investors and consumers in Germany all fell in June. At the same time, a composite purchasing managers’ index published by Markit Economics climbed to the highest level since May 2011, boosted by growth in Germany and signs of a revival in France and Italy.
More uncertainty may be ahead after Greek voters on Sunday rejected the terms of a European Union-led bailout proposal, leaving the region’s leaders to determine whether the nation can remain in the euro.
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