German Industrial Orders Fall Unexpectedly in May, Adding to Signs of Economic Downturn
In a surprising turn of events, German industrial orders experienced a fifth consecutive drop in May, indicating that the manufacturing sector in Europe's largest economy may not see a recovery in the near future. According to the federal statistics office, orders were down by 1.6% on a seasonally and calendar-adjusted basis, contrary to analysts' expectations of a 0.5% rise. Excluding large-scale orders, new orders fell by 2.2% in May compared to the previous month, with a three-month comparison showing a 6.2% decline.
"The downward trend is still in full swing," noted Hauck Aufhaeuser Lampe Privatbank chief economist Alexander Krueger. PMI data for manufacturing in June also indicated a continued downturn in the sector, while Ifo's business climate index reflected manufacturers' skepticism about the future.
The ongoing decline in orders, coupled with a negative outlook for the industrial economy, suggests a subdued economic performance in the coming months, according to the German economy ministry. The ministry emphasized that incoming orders are expected to stabilize as global trade recovers and demand for industrial products gradually increases.
VP Bank chief economist Thomas Gitzel highlighted the challenging situation in global industry, particularly in the United States and China, with no immediate signs of improvement. Consequently, German growth is unlikely to accelerate in the short term.
In conclusion, the persistent decline in German industrial orders underscores the challenges facing the manufacturing sector and the broader economy. Investors and businesses should closely monitor these developments and adjust their strategies accordingly to navigate the uncertain economic landscape effectively.