Several sizable orders boosted the surprise increase in German industrial orders in July. However, experts doubted that the weak sector was on the verge of a lasting recovery.
Figures released on Thursday show that orders increased by 2.9% in July over the previous month on a seasonally and calendar adjusted basis. This surprised analysts, who had predicted a 1.5% decline.
Furthermore, the Statistics Office updated its June figures, which previously showed a 3.9% increase for the month to a 4.6% increase.
According to Jens-Oliver Niklasch, senior economist at LBBW bank, “even with the second good figure in a row, incoming orders are likely to remain a lonely island in the sea of weak data, especially as large orders played the decisive role here.”
Large-scale orders saw a monthly rise of 86.5%. In July, new orders were 0.4% fewer than in June when these orders—which included those for trains, ships, and airplanes—were taken out of the equation.
Since the start of the year, orders seem to have stabilized, according to Ralph Solveen, senior economist at Commerzbank.
“However, the sentiment indicators, which have been weak up to now, call for caution and at least argue against a rapid turnaround for the better,” Solveen added.
According to a purchasing managers’ poll released on Monday, the decline in Germany’s manufacturing sector, which makes up over 25% of the continent’s largest economy, intensified in August.
According to the less volatile three-month-to-three-month comparison of industrial orders, there was a 1.7% increase in new orders between May and July compared to the preceding three months.
“The basic trend in orders remains very weak,” said Alexander Krueger, chief economist at Hauck Aufhaeuser Lampe. “In view of a lack of competitiveness and growing competition from abroad, a turnaround is out of the question.”
According to the statistics office, new overseas orders increased by 5.1% for the month while domestic orders were the same.
Michael Herzum, head of Union Investment’s macro and economic strategy, claimed that “German industry is not gaining momentum.” “The signs of life in German industry, which have been tentative for some time, are increasingly revealing deeper problems.”
China is in a structural crisis and Germany, as an export nation, is feeling the effects, he added.
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