German factory orders fall again in April, industrial production likely to fall in months ahead

German manufacturing continues to see weak patch in April. Factory orders continued to fall in the month. Orders dropped again by 2.5 percent on a sequential basis. This substantial minus exaggerates the underlying trend slightly because orders in the “other vehicles” segment, which are always quite volatile, have dropped by more than one third, noted Commerzbank in a research report.

But, the measure without this sector also dropped by 0.6 percent, its fourth fall in a row. While domestic demand continued to be quite strong in the earlier months, it dropped in April. Meanwhile, orders from abroad made up for a small part of the considerable fall in the previous months, although this was mainly due to more orders from outside the euro area. Demand from the euro area has clearly fallen again.

The subdued development is consistent with the considerable drop in the purchasing managers’ index in the past few months, which was also largely caused by a fall in the subcomponents for orders.

“Against this backdrop, industrial production should generally decline in the coming months, even though sales figures, also published today, suggest a slight increase in industrial production in April. The German economy should therefore post only moderate growth again in the second quarter”, added Commerzbank.

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