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German Factory Orders Fell Less Than Feared in June

Economic Indicators Aug 04, 2022 08:08
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By Geoffrey Smith

Investing.com -- German factory orders ended the second quarter on a weak note, but performed better than expected in a month overshadowed by a growing energy crisis.

Statistics office Destatis said incoming orders fell 0.4% from May, due overwhelmingly to a drop in orders from outside the Eurozone. Big-ticket items, which are often volatile from month to month, fell particularly sharply.

However, that was less than the 0.8% drop expected ahead of time. Excluding big-ticket items, orders rose 0.4%, thanks to increases in demand for consumer and intermediate goods.

Eurozone buyers were particularly active, raising orders by 3.4%, while domestic orders rose 1.1%. By contrast, orders from outside the Eurozone fell by 4.3%.

Destatis also revised down May’s data to show a drop of 0.2% rather than the 0.1% originally reported. While this is a minor adjustment, it breaks with a recent trend of big upward revisions to German data.

Claus Vistesen, an analyst with Pantheon Macroeconomics, noted that orders are now down 6% from the start of the year, a more relevant comparison than the 9% year-on-year drop from “unsustainable” levels 12 months ago.

They’re also 3.4% ahead of their pre-pandemic level, in sharp contrast to industrial production which still faces a “significant shortfall”, Vistesen said.

Destatis put this down to “the continuing acute shortage of intermediate products. Enterprises still have difficulties completing their orders as supply chains are interrupted because of the war in Ukraine and distortions persist that have been caused by the COVID-19 crisis.”

The data come a day ahead of industrial production data for June, which ought to give insight on to whether the slowing German economy contracted already in the second quarter. Preliminary data suggested GDP was flat, but weaker-than-expected retail sales for June published since then have raised the possibility of a downward revision.

Commerzbank chief economist Joerg Kraemer said via Twitter that while the numbers looked better than expected, he still expects a contraction, pointing to the "collapse" in the corresponding section of the Ifo business survey last month.

"Industry is suffering in a war of nerves over gas and high inflation," Kraemer warned.

German Factory Orders Fell Less Than Feared in June
 

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