GERMAN DATA
German factory orders declined 1.6% M/M in May, a notable miss compared to the +0.5% expected, particularly given April data was also downwardly revised by 0.4pp to -0.6% M/M. The underlying 'core' measure also points towards a decline - with the weakness solely driven by a drop off in non-EU orders.
- On a yearly basis, most of the decline to -8.6% was explained through a base effect - last May saw a strong +6.0% M/M, which fell out of the comparison this time. Nevertheless, the print surprised more than 2pp to the downside here.
- 'Core' (ex-large ticket items) orders, a better measure of underlying activity declined by 2.2% M/M (although this was largely just reversing April's +2.3%). The less volatile 3M/3M measure printed stronger than before, at -0.8% (vs -1.5% prior), driven by a base effect. The 3M/3M measure has now printed in negative territory for the 25th consecutive month, and the overall core index stands around levels last seen in Summer 2010. Orders in the 3-months to May were 18.4% lower than the peak seen in the 3-months to June 2021.
- Non-Eurozone orders drove the core decline, with orders falling -6.1%M/M. Domestic and Eurozone core orders both came in flat on a sequential comparison (vs +0.6% / +5.9% prior, respectively).
- The category breakdown showed lower investment goods / non-durable goods orders, which came in at -5.3% M/M (vs +4.0% prior; lowest rate since March 2023) and -2.3%, respectively (vs +2.9% prior). Durable goods meanwhile have seen a strong jump (+24.9%; the category can be volatile) but have not had much impact on the headline.
- Real manufacturing turnover meanwhile also decreased, by 0.7% M/M in May (-1.0% prior, revised from -0.9%).
- Overall, the data adds to the view that the gradual recovery of the German economy stalled recently, and shows that the external sector, which provided a decent boost in Q1, remains volatile.
MNI, Destatis
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