German manufacturing orders rise above expectations sequentially in May

German manufacturing orders rose more strongly than anticipated in May. On a sequential basis, incoming orders for German manufacturing rose 2.6 percent, covering up for a good part of the decline in the earlier months, particularly as the April figure was also upwardly revised.

Unlike in the previous months, new orders in the “other vehicles” sector, which are quite volatile, played just a minor role. Excluding them, the rise is 2.2 percent compared to the earlier month. In particular, orders from the euro area rose, while orders from outside the euro area were even lower than in April. Domestic orders also rose compared to the earlier month.

These data underpin the general assessment that the recently subdued figures from manufacturing do not hint the end of the upswing, noted Commerzbank in a research report. Rather, industrial production is expected to stabilize in the months ahead. At least the trend for production has not dropped anymore and the slight rise in real sales in May implies that production has risen a bit this month, stated Commerzbank.

But orders in April and May were still below the average for the first quarter, and production in second quarter is also expected to be lower than in the initial three months, so that real gross domestic product in the second quarter possibly rose just moderately again, added Commerzbank.

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