June Factory Orders Beat Defies Weaker Sentiment Data

Germany factory orders surprised to the upside in June, rising 3.9% M/M SWDA (vs 0.5% cons, a one tenth downwardly revised -1.7% prior). The beat follows five consecutive months of downside surprises (and also five consecutive negative sequential monthly readings) and comes against a backdrop of weakening industrial sentiment data (e.g. the manufacturing PMI, IFO and EC industry survey).

• On a 3m/3m SWDA basis, sales remained weak at -1.4% while the Y/Y figure was -11.8% (vs -14.2% cons, -8.7% prior).
• Looking at the “core” factory orders metric (excluding large-scale orders), sales rose 3.3% M/M (vs -2.4% prior) and 1.4% on a 3m/3m basis (vs -0.8% prior).
• Core durable goods orders rose 11.0% 3m/3m (vs 10.8% prior), with the press release noting a 9.3% M/M rise in automative industry orders.
• Core domestic orders rose 4.7% M/M and 0.9% 3m/3m in June, while foreign orders rose 2.3% M/M and 1.8% 3m/3m.
• Real turnover in manufacturing, which can provide some signal for the June industrial production release (due tomorrow), was -0.9% M/M and -5.0% Y/Y.  Current consensus for June IP stands at 1.0% M/M (vs -2.5% prior) and -4.2% Y/Y (vs -6.7% prior).