German industrial orders plunge most in 18 months
BERLIN — German industrial orders fell more than expected in June, posting their steepest monthly drop in nearly a year and a half, suggesting that trade tensions caused by US President Donald Trump might curtail growth in Europe’s largest economy.
German companies have been spooked by an escalating trade conflict between the United States and China as their tit-for-tat tariffs hit businesses in Germany. The United States is Germany’s biggest export market; China its most important trading partner.
The Federal Statistics Office said on Monday that contracts for “Made in Germany” goods fell by four per cent on the month in June after rising 2.6 per cent the previous month. That was the biggest drop since January 2017 and undershot a Reuters poll of analysts, who had predicted a 0.4 per cent decrease. “Disappointing new orders data show tentative signs of trade tensions hitting the German economy, which doesn’t bode well for the industrial outlook in the second half of the year,” ING Bank economist Carsten Brzeski said.
But Stefan Kipar, an analyst with BayernLB, said not too much should be read into the industrial orders data, a highly volatile indicator.
“The June reading should not hide the fact that the previous month was very strong ... This is not a catastrophe,” Kipar said. He also said that recent sentiment surveys were providing an upbeat outlook for the German economy.
The overall drop in industrial orders was driven by a 4.7 per cent decline in foreign demand, with orders from countries outside the eurozone falling the most.