Decline In German Factory Orders Exceeds Expectations

(RTTNews) - German factory orders declined more-than-expected in May as both domestic and foreign orders decreased from April on geopolitical uncertainties.

New orders in manufacturing fell by a seasonally adjusted 1.7 percent month-on-month in May, provisional data from Destatis showed Friday. Economists had forecast a 1.1 percent fall in new orders, after rising a revised 3.4 percent in April.

Domestic orders slid 2.5 percent versus April's 1.1 percent increase. Similarly, foreign orders were down by 1.2 percent in May compared to the 5 percent gain in the previous month.

Orders for intermediate goods declined 3.4 percent and that for consumer goods by 1.2 percent. Capital goods orders also dropped in May, by 0.7 percent.

As regards the direction of trade in foreign transactions, new orders from the euro area were up 5.7 percent on the previous month. Meanwhile, orders from other countries which prevail in foreign transactions in the manufacturing sector, decreased by 5.2 percent, Destatis said.

Orders are expected to grow in the second quarter, the economy ministry said today. However, increased geopolitical risks need to be examined. Nonetheless, the upturn is likely to continue at a moderate pace, it said.

On a yearly basis, factory orders grew 5.5 percent in May, but slower than the 6.6 percent rise in April. Orders were expected to increase by 6 percent.

The Purchasing Managers' survey revealed that the German manufacturing sector expanded at the weakest pace since October last year as new orders and output growth weakened in June. The Markit/BME purchasing managers' index fell to 52 in June from 52.3 in May.

A PMI score above 50 suggests expansion, while a print below 50 indicates contraction.

According to survey conducted in the construction sector, activity deteriorated in June at the sharpest pace in 15 months, led by a steep fall in new orders, prompting firms to reduce workforce, Markit said today. The seasonally adjusted PMI fell sharply to 45.5 in June from 48.1 in the previous month.