Germany’s factory orders dropped unexpectedly on foreign demand in July amid trade disputes with the United States.
Data from Destatis, released Thursday, showed that new orders in manufacturing fell 0.9 percent in July from June, confounding expectations for an increase of 1.8 percent.
Nonetheless, this was slower than the revised 3.9 percent decline seen in June.
Domestic orders grew 2.4 percent, while foreign demand decreased 3.4 percent in July. New orders from the euro area were down 2.7 percent and that from other countries slid 4 percent.
On a yearly basis, factory orders fell 0.9 percent after easing 0.8 percent in June. Economists had forecast a 1.9 percent rise for July.
The economy ministry said global uncertainty caused by trade conflicts probably weighed on orders. Moreover, there were temporary bottlenecks in the approval of new passenger cars.
Even though the decline was partly due to a special effect in the automotive industry, the figures show that there is still no end in sight to the soft spot in manufacturing and that the German economy is likely to grow only moderately in the second half of the year, Ralph Solveen, an analyst at Commerzbank, said.
Meanwhile, the Ifo Institute said the German economy regained impetus and this dynamic is set to carry over into next year. That said, there will be no return to the high growth rate of 2017, the think tank added.
According to Ifo’s Autumn Forecast, the largest euro area economy will expand 1.9 percent each this year and next, before a gradual slowdown in 2020. Earlier, the institute had projected 1.8 percent expansion for both 2018 and 2019.
Elsewhere, Purchasing Managers’ survey revealed that the Germany’s manufacturing sector growth weakened in August, reflecting signs of weakness in new orders and concerns over global geopolitics.
The construction sector returned to growth midway through the third quarter after having stalled in July. The headline IHS Markit construction Purchasing Managers’ Index ticked up to 51.5 in August from 50.0 ‘no-change’ mark in July.