German factory orders unexpectedly rise 2.9% in July on strong orders

According to data from You are ready,

• New orders in other automotive manufacturing sectors (aircraft, ships, trains, military vehicles) jumped 86.5% in July.
• Orders for electrical equipment manufacturing jumped 18.6%.
• However, orders in the mechanical engineering sector fell by 6.1%.
• Excluding large orders, incoming orders are down 0.4%.

If we look at the broader sectors of the German economy:

• Orders in the capital goods sector increased by 3.5% in July, while those in the intermediate goods sector increased by 4.4%.
• The consumer goods sector reported a 5.8% drop in new orders.
• Orders from abroad increased by 5.1%, while those from the eurozone increased by 5.9%.
• New orders from outside the eurozone increased by 4.6%.
• However, domestic orders remained unchanged.
• From May to July 2024, factory orders increased by 1.0% compared to the previous three months.

The increase in manufacturing orders in July contrasts with the weaker trend in new orders in manufacturing PMI surveys, mitigating recession risks. HCOB Manufacturing PMI SurveyNew job inflows fell at their fastest pace since November 2023, with new export orders also falling sharply. The manufacturing PMI index fell to 42.4 in August from 43.2 in July.

German factory orders and ECB rate developments

Survey-based economic indicators in Germany suggest a growing risk of a deep economic recession.

Industrial orders figures, however, paint a more positive picture of the German economy. These encouraging figures could allay fears of a long German recession. Nevertheless, these figures are not expected to influence the trajectory of ECB rates. The ECB remains mainly focused on the services sector and inflation.

EUR/USD reacts to fall in factory orders

Ahead of the factory orders report, EUR/USD climbed to a high of $1.10865 before falling back to a low of $1.10746.