German factories reported a 11.7 percent decrease in orders for the month of July, much worse than the roughly 4 percent decline anticipated by economists polled in a Bloomberg survey and by news service Reuters.
The economic update came from the German government’s Federal Statistics Office (Statistisches Bundesamt) known as Destatis. The data is preliminary and is expressed in real terms, taking inflation into account.
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Its report noted that while June numbers were up by 7.6 percent, this spike was caused by a sudden large order of aerospace products. It noted that the July decline was caused by a decline across German manufacturing sectors, including “computer, electronic and optical products (-23.6 percent), machinery (-8.7 percent), electrical equipment (-16.7 percent) and fabricated metal products (except machinery and equipment) (-14.2 percent).” One sector unaffected was motor vehicles, trailers and semi-trailers, which saw a 2.7 percent increase.
Orders were also down in German capital goods (-15.9 percent), intermediate goods (-4.5 percent), and consumer goods (-8.2 percent). The decline in German factory orders were down from all sides, whether European (-24.4 percent) or non-European (-4.1 percent) and whether foreign (-12.9 percent) or domestic (-9.7 percent).
Germany is the industrial powerhouse of Europe, being the largest economy in the continent. A decline in their industrial output spells bad fortune generally.
But German economic leaders are not pessimistic. While admitting that the country “slipped into a technical recession” during the winter as a result of the Ukraine conflict and that the expected recovery “has not been satisfactory,” the president of Germany’s central bank Joachim Nagel said the country should be “more self-confident.” He rejected the “sick man of Europe” label that had been used to describe its economic downturn in the press, calling it a “misdiagnosis” and saying “We expect the picture to brighten again.”
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