Good news from German industry

In our weekly preview last Friday, we wrote that we would be positively surprised by anything other than a significant decline in the April figures for incoming orders in the German economy. This is because the sharp rise in March was certainly supported by pull-forward effects (due to the threat of US tariffs) and the late timing of Easter. Now, factory orders in April have actually risen again slightly by 0.6% compared with the previous month, and there was also a small increase in the less volatile core figure excluding big-ticket orders.

This means that the trend in orders received is pointing upwards again. Industrial companies received 2.2% more orders in April than on average in the first quarter, and the increase for the core figure was even higher at almost 3%. Together with the recent improvement in the business climate, this supports our assessment that the German industry has passed the trough of the economic cycle and is likely to expand production again in the further course of this year. This positive trend is likely to be triggered by the improved monetary environment. After suffering for a long time from the end of the ECB's zero interest rate policy and the associated interest rate hikes, this negative factor should become less and less significant. Instead, the ECB's interest rate cuts since last summer should start to boost the economy in the coming months (see also here ).

For full text see attached PDF-Version.