June German orders – only bottoming out

German manufacturing orders rose sharply by 3.9% in June. The increase was well above expectations (consensus: 0.5%; Commerzbank: 1.5%). Even without the recently volatile big ticket orders, new orders rose strongly by 3.3%.

Countermovement to the weak May

The strong increase is undoubtedly a positive surprise. But it is also a countermovement to the sharp drop in orders in May (excluding large orders: -2.4%). Overall, this month's reading is only a sign of a bottoming out.

Other leading indicators weak recently

The other leading indicators also suggest a cautious interpretation of today's figures. The Ifo Business Climate has already fallen three times in a row, and the Purchasing Managers' Index has already fallen twice. All of this puts a big question mark over a sizeable economic recovery in the second half of the year, which many economists still expect.

Companies and consumers deeply insecure

The easing impact of the high interest rates and energy prices has not yet had the hoped-for positive effect on the economy. Companies are simply too insecure because they do not see an improvement in Germany's business conditions, which have been eroding for many years. Consumers are also deeply insecure, having lost a great deal of purchasing power due to past high inflation. They are reacting positively to the stronger rise in wages only slowly.

All in all, we expect the economic upturn to remain anemic (forecast 2024: 0.0%). Following the decline in second quarter GDP, there are even downside risks to this forecast.

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