Large-Scale Foreign Orders Driving Factory Orders Decline

GERMANY APR FACTORY ORDERS -0.4% M/M (FCST +2.8%); MAR -10.9% M/M

GERMANY APR FACTORY ORDERS -9.9% Y/Y (FCST -8.4%); MAR -11.2% Y/Y

• German factory orders contracted for a second consecutive month in April, dipping by -0.4% m/m. This follows the substantial -10.9% m/m drop recorded in March, which reflected weak auto and a recalibration from February military vehicle orders.
• However, excluding large orders German manufacturing orders rose +1.4% m/m and domestic orders expanded by +1.6% m/m, implying that domestic demand saw muted growth in April.
• Despite today's data adding to evidence that total demand in the industry is weak, Destatis' unfilled orders metric remains elevated, projecting a buffer of 7.4 months of work in March (compared to March 2020 levels of 5.9 months).
• Following the robust French April print, German industrial production due tomorrow is expected to see a minor rebound of +0.6% m/m and +1.5% y/y.
• Looking forward, headwinds to demand have been flagged by the contractionary PMI over recent months, which alongside muted IFO expectations imply lacklustre production buffered by previous orders for now.