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German Factory Orders Fall Unexpectedly On Weak Domestic Demand

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German factory orders declined unexpectedly in July on weak domestic bookings and stagnant demand from foreign markets.

Factory orders fell 0.7 percent month-on-month in July, in contrast to a revised 0.9 percent rise in June, figures from Destatis revealed Wednesday.

This was the first fall in three months. Orders were forecast to climb 0.2 percent in July.

Domestic orders slid 1.6 percent, while foreign orders remained flat in July. Orders from the euro area decreased 1 percent, which was offset by a 0.6 percent rise in incoming orders from other countries.

Excluding volatile bulk orders, new orders increased 0.6 percent on the previous month in July.

On a yearly basis, factory orders expanded 5 percent in July, slightly slower than June's 5.1 percent increase.

Germany is not performing as well as implied by the very positive sentiment indicators, Ralph Solveen, an analyst at Commerzbank, said.

With production in July likely to have dropped as well, a somewhat smaller growth contribution from manufacturing appears to be on the cards in the third quarter, the analyst added.

Manufacturers of intermediate goods saw new orders fall by 0.4 percent compared with June. Orders for capital goods dropped 0.7 percent and that for consumer goods decreased 3 percent.

Data showed that the manufacturing turnover dropped 0.1 percent in July, reversing a 0.5 percent rise in June.

The economy ministry said German companies received as many orders as they had before the outbreak of financial crisis in 2008. Indicators signal that solid upturn in the manufacturing sector is continuing, the ministry added.

by RTT Staff Writer

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