Germany – Another setback for factory orders

In June, new orders in manufacturing fell by 1.0% as compared to the previous month. Excluding lagre orders, which have little impact on production in the short term, there was a slight increase of 0.5%. These figures are particularly relevant against the backdrop of the significant setback in May. In May, orders excluding large orders fell by almost 3% compared with April, despite a slight upward revision. Orders in June were unable to make up for this setback.

Overall, order intake excluding major orders is thus back at the level seen at the beginning of the year, once again dashing hopes for a sustained recovery in German industry. Early indicators such as the purchasing managers' index in the manufacturing sector and the Ifo business climate index had pointed to a slight recovery in the second quarter. However, these positive expectations are clearly not yet reflected in hard order figures. This underlines our assumption that the German economy will only grow moderately this year.

There is now a risk that US tariffs will create further headwinds for German industry. In June, orders from abroad fell by 3.0%. This is exclusively attributable to trade with countries outside the eurozone. This could already be an indication of the damaging effect of US tariffs on German exports.

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