German Factory Orders Log Unexpected Decline

(RTTNews) - Germany's factory orders declined unexpectedly in August as the positive impetus from the frontloading of orders from the U.S. faded, official data revealed, adding woes to the struggling economy.

Manufacturing orders decreased 0.8 percent on a monthly basis, following a 2.7 percent decrease in July, the statistical office Destatis reported Tuesday. This was in contrast to the anticipated increase of 1.2 percent.

Excluding large orders, new orders were 3.3 percent lower than in the previous month.

Data showed a sharp decrease of 6.4 percent in new orders in the automotive industry. In addition, the manufacture of computer, electronic and optical products and the pharmaceutical industry reported notable contractions.

New orders for capital goods decreased 1.5 percent, while demand for consumer goods fell markedly by 10.3 percent. On the other hand, orders for intermediate goods rose 3.0 percent.

Foreign orders decreased 4.1 percent in August. Orders from within the Eurozone fell 2.9 percent and that from outside the Eurozone slid 5.0 percent. In contrast, domestic orders grew 4.7 percent.

On an annual basis, factory orders logged an increase of 1.5 percent after a decrease of 3.3 percent in July.

In August, real turnover in manufacturing was down 0.8 percent from last month, which followed a 0.3 percent decrease in July. Year-on-year, manufacturing turnover dropped 1.1 percent.

ING economist Carsten Brzeski said the latest data is another illustration that Germany's industrial slump is not about to end any time soon.

The economist noted that industrial order books reached back empty level, where they were at the start of the year as the effect of U.S. front loading faded. Brzeski sees a small glimmer of hope in the August industrial orders data as domestic demand finally picks up.

The latest purchasing managers' survey by S&P Global showed that Germany's manufacturing activity contracted again in September due to the negative developments in new orders and employment.

The final factory PMI dropped moderately to 49.5 from 49.8 in the previous month.