German factory orders fall sequentially in June, real GDP likely to have grown 0.4 pct

German new orders in manufacturing dropped in June on a sequential basis. The simultaneous solid growth in orders and production in May was an indication that special effects were involved here, noted Commerzbank in a research report. The June’s order figures have confirmed it.  Sequentially, factory orders fell 4 percent in June. On a year-on-year basis, factory orders dropped 0.8 percent.

The often very volatile orders in the “other vehicles” sector played only a subordinate role. Stripping this, there is still a minus of 3.7 percent. For the second quarter, total orders dropped 1.7 percent compared to the first quarter, which is just slightly less worse than the decline of 2.2 percent in the first quarter.

Orders from outside the euro area developed especially soft in June, where the softer Chinese economy is expected to become more and more noticeable. Domestic orders also continued their slight downward trend. A slightly positive trend can currently only be seen in orders from the euro area, if at all, which have steadied after the slump around the turn of the year and are now showing a slight upward trend again. In all, today’s figures show that manufacturing is not over yet, even if there have recently been signs of stabilization in the sentiment indicators.

“Q2 real GDP is at best expected to grow by 0.4 percent next Monday, and the economy will probably not grow more strongly in the second half of the year either”, added Commerzbank.

At 14:00 GMT the FxWirePro's Hourly Strength Index of Euro was neutral at -28.7532, while the FxWirePro's Hourly Strength Index of US Dollar was bullish at 93.6059. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex