German factory orders grow below expectations in February, economy likely to grow more slowly in 2018

German factory orders grew below expectations in the month of February. On a sequential basis, factory orders rose just 0.3 percent, as compared with the consensus expectations of 1.5 percent. On a year-on-year basis, orders rose only 3.5 percent, as compared with expectations of a rise of 6.3 percent. This indicates that the recent fall in leading indicators is probably not only a correction to the previous sharp rise, but at least that manufacturing has lost some momentum, noted Commerzbank in a research report. If the always volatile orders in the “other vehicle” sector are excluded, there was a slight drop. The core measure had dropped by nearly 3 percent in January.

Today’s data on new orders affirm the recent falls in the Ifo business climate and the manufacturing PMI figure. The upswing in manufacturing lost momentum at the start of the year. Therefore, the trend for production in manufacturing calculated on the basis of incoming orders in recent months is still moving at best sideways, stated Commerzbank.

There are signs of a marked decline in production figures. Real industrial turnover dropped 2.1 percent in February, which has shown a very high correlation with production in the past. Thus, the German economy is expected to expand a bit more slowly in the course of this year than in the last quarters.

“However, there is no end in sight to the upswing, as the ECB's very expansionary monetary policy will continue to boost the economy”, added Commerzbank.

At 17:00 GMT the FxWirePro's Hourly Strength Index of Euro was neutral at 29.3324, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 27.0558. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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