GERMAN DATA
German factory orders surprised to the upside again in July [corrected from August in prior bullet], rising 2.9% M/M (vs -1.7% cons; +4.6% prior, upwardly revised from +3.9%). The headline figure was pulled up by one-off large orders in the "other vehicles" sector, however with underlying core orders declining slightly. The bigger picture remains that underlying factory orders remain at a weak level overall despite July's upside headline surprise. Sentiment questions if this is subject to change.
- On a 3m/3m basis, orders were +1.7% while the Y/Y figure was pulled up by a base effect (but also came in above expectations) at +3.7% Y/Y (vs -1.9% cons; -11.2% prior, revised from -11.8%).
- The higher headline figure comes amid a +86.5% M/M rise in the "other vehicles" (airplanes, trains, ships, military) category, which saw multiple one-off large orders in July according to Destatis.
- Looking at underlying 'core' orders (excl. large-scale one-offs), sales decreased 0.4% M/M. The 3m/3m remained above neutral for the second consecutive time but declined a bit compared to July at +1.0% (vs +1.4% prior).
- The sequential comparison across sectors here shows all main categories except intermediate goods decline. Foreign orders developed positively, domestic orders declined (see table).
- Real turnover in manufacturing, which can provide some signal for the July industrial production release (due tomorrow), was -2.3% M/M and -5.6% Y/Y. Current consensus for July IP stands at -0.5% M/M (vs +1.4% prior) and -3.5% Y/Y (vs -4.1% prior), so there may be some downside risk to tomorrow's print.
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