German factory orders rise first time this year on cars, metals
GERMAN factory orders rose in June – snapping a five-month slump for Europe’s largest economy.
Demand increased 3.9 per cent from May, when it dropped a revised 1.7 per cent, data on Tuesday (Aug 6) showed. That advance topped all economist estimates in a Bloomberg survey, which predicted a more moderate gain of 0.5 per cent.
Driving factors included the automotive industry, while sectors manufacturing fabricated metal products and other transport equipment also contributed. Domestic orders were particularly strong.
The reading may offer some comfort for Germany’s long-suffering manufacturing sector. It comes, though, after data last week showed the economy unexpectedly shrank in the first quarter, while business sentiment also dipped.
The Bundesbank warned in its July report that “temporary hopes that industrial activity would soon pick up were distinctly dampened when data for May were published”. It nevertheless predicted slightly firmer economic activity in the third quarter.
Services are outperforming manufacturers, with historic early-year wage rises boosting consumers’ mood. Pay gains are moderating, however, and inflation is proving sticky.
The economy’s struggles are proving a headache for the country’s coalition government, whose term has been dominated by stagnating or shrinking output. In another potential headwind, Finance Minister Christian Lindner suggested last week that more fiscal tightening may be necessary, despite a recent hard-won compromise over the budget.
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