German industry surprisingly received significantly more orders in June. However, experts do not believe the downward trend has been broken yet.
A ray of hope for the struggling industry in Germany: In June, the sector received more orders for the first time this year. The Federal Statistical Office announced that incoming orders had increased by 3.9 percent compared to the previous month. Previously, incoming orders in industrial companies had fallen for five months in a row.
Analysts had expected a recovery in incoming orders. On average, however, they had expected a much smaller increase of 0.5 percent. Compared to the previous year, significantly fewer new orders were recorded. In this regard, the Federal Office reported a decline of 11.8 percent. Without major orders, total orders would have increased by 3.3 percent month-on-month, it said.
More demand from within the country
The main reason for the increase in June was significantly stronger demand from within the country. According to the Federal Ministry of Economics, orders here rose sharply by 9.1 percent. Demand from abroad also developed better, but only increased slightly. Orders from there increased by 0.4 percent.
According to the ministry’s statement, orders in the important sectors of mechanical engineering, motor vehicles and motor vehicle parts, metal products and other vehicle construction have increased sharply in some cases. In contrast, orders received in the metal production and processing sector and in the pharmaceutical industry, among others, have fallen.
“Downward trend not yet broken”
The latest development in domestic orders, together with the latest survey results from the European Central Bank (ECB), could indicate “increased investment intentions and a recovery in capital investment in the second half of the year,” commented experts from the ministry. “However, a broader recovery in industrial activity is not likely for the time being, given the continued subdued mood among companies and the still weak foreign demand.”
“There is still some good news,” said Jens-Oliver Niklasch, analyst at Landesbank Baden-Württemberg. But more needs to come together to really create confidence for the industry. “This does not mean that the downward trend has been broken.”
Source: Stern
