German Factory Orders Undershoot Forecast as Momentum Cools

Updated on
  • Orders gain 0.2% on month vs. estimated 0.5% increase
  • Domestic demand slumps most in 11 months as export orders jump

German factory orders increased less than forecast in July as domestic weakness damped a surge in investment-goods demand from the euro area.

Orders, adjusted for seasonal swings and inflation, rose 0.2 percent from June, when they fell a revised 0.3 percent, data from the Economy Ministry in Berlin showed on Tuesday. The median in a Bloomberg survey was for an increase of 0.5 percent. Orders were down 0.7 percent from a year earlier.

The report follows a series of data signaling that economic momentum in Europe’s largest economy has cooled. Business confidence slumped the most since 2012 in August and a gauge for private-sector activity fell to the lowest level in 15 months. Still, the Bundesbank maintained in its last monthly report that growth should pick up in the current quarter.

“Data suggest that in the summer the German economy won’t be able to maintain the fast pace observed in the first half of the year,” said Stefan Kipar, an economist at BayernLB in Munich. “We expect a slight economic slowdown in the second half.”

The euro was little changed after the report and traded at $1.1151 at 8:35 a.m. Frankfurt time.

The ministry’s report showed that export orders were bolstered by a 12.1 percent surge in euro-area demand for investment goods, according to the report. Domestic orders fell 3 percent, the most since August last year.

“The sideways movement of orders speaks for more subdued momentum in manufacturing in autumn,” the Economy Ministry said in an e-mailed statement. “The business climate in manufacturing has cooled of late, even though it remains above its long-term average.”

— With assistance by Andre Tartar, and Kristian Siedenburg

(Updates with comment from economist in fourth paragraph.)
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