German Industrial Orders Rise Unexpectedly in July

By Maria Martinez

(Reuters) – German industrial orders unexpectedly rose in July, boosted by large orders, leading economists to doubt a sustained sector upturn.

Orders increased by 2.9% on a month-over-month basis, on a seasonally and calendar adjusted basis, contrasting analysts’ predictions of a 1.5% decline. Moreover, June’s data was revised upward, indicating a 4.6% increase instead of the previously reported 3.9%.

Jens-Oliver Niklasch, LBBW bank’s senior economist, noted, “Even with the second good figure in a row, incoming orders are likely to remain a lonely island in the sea of weak data,” emphasizing the pivotal role of large orders.

Large-scale orders surged 86.5% this month, but excluding them, new orders fell 0.4% from June.

Orders appear to have stabilized since the year’s beginning, according to Commerzbank’s Ralph Solveen, although he urged caution due to ongoing weak sentiment indicators.

A survey indicated that the downturn in Germany’s manufacturing sector, which comprises around a fifth of the economy, accelerated in August.

The three-month comparison showed a 1.7% increase in new orders from May to July, but overall, the trend remains weak, according to Hauck Aufhaeuser Lampe’s chief economist Alexander Krueger. “A turnaround is out of the question,” he stated, pointing to issues of competitiveness and increased foreign competition.

New foreign orders rose by 5.1%, while domestic orders remained stagnant, according to the statistics office.

Michael Herzum from Union Investment expressed that, “German industry is not gaining momentum,” highlighting the deeper problems exposed by the structural crisis in China, significantly impacting Germany as an export-dependent nation.