German factory orders miss big time

• German new orders in manufacturing fell -4.0% m/m  while falling -0.8% over the year in June. 
• Revised data for May saw new orders in Germany rising 2.6% m/m while increasing 4.7% over the year.
• German factory new orders follow the lead on manufacturing PMI slowdown.

German factory new orders fell dramatically in June slumping -4.0% over the month in June compared to -0.2% monthly decline expected. Strong deceleration translated into the lower reading of the German factory new orders also in the year-to-year comparison falling -0.8% y/y in June.

In May 2018, German factory new orders rose 2.6% over the month while rising 4.7% over the year.

The slowdown in German factory new orders in June was a combination of lower domestic orders that decreased by -2.8% over the month and foreign orders decreased by -4.7% over the month in June 2018. New orders from the euro area were down -2.7% over the month, new orders from other countries decreased -5.9% over the month in June. 

In terms of structure, the manufacturers of intermediate goods saw new orders fall by -2.3% over the month in June while manufacturers of capital goods showed decreases of -4.7% on the previous month. For consumer goods, a decrease in new orders of -4.5% was recorded.

Summer has taken a toll on German manufacturing with the price-adjusted turnover in manufacturing in June 2018 down -1.0% over the month in June compared with 0.9% monthly increase in May.

The data on German manufacturing new orders from the official statistical sources move in the same trend as shown by the IHS/Markit. According to German manufacturing PMI report, activity in German manufacturing fell to the lowest level in  18-months.

German manufacturing PMI fell from last December’s record high to the lowest in one-and-a-half years in June. this was accompanied by a worrying slide in export orders growth since the start of the year and continued into June, with the latest survey’s anecdotal evidence highlighting quieter client interest from the US and China.