German malaise continues as factory orders tumble
Germany’s economic woes continued this morning as official statistics showed new orders in manufacturing plunged by 2.2 per cent in May compared to the previous month.
Read more: German think tank says receding manufacturing sector damaging growth
The figure was much worse than the 0.1 per cent fall economists were expecting, and raises fresh worries over Germany’s growth for 2019.
New orders for the factories in Europe’s biggest economy were down 8.6 per cent year on year, a far bigger drop than economists’ predictions of a 5.7 per cent slide.
Germany’s economy has suffered in 2019 due to a number of factors. New car emissions tests and low water in the river Rhine have caused industrial hold-ups and hurt output.
Meanwhile, trade tensions and a global economic slowdown, particularly in China, have dented demand for German products.
The German government said in April it expects the economy to grow by just 0.5 per cent in 2019. It predicted growth of 2.1 per cent for 2019 a year earlier.
In an ongoing trend, domestic orders for German manufactured goods in May increased by 0.7 per cent month on month while foreign orders fell by 4.3 per cent.
New orders from the Eurozone were down 1.7 per cent while orders from other countries dropped by 5.7 per cent.
While domestic demand has been supporting growth, weak Eurozone retail figures yesterday cast doubt on whether that trend can continue.
Michael Hewson, chief market analyst at CMC Markets, said today’s figures showed “that economic activity in Europe’s powerhouse is continuing to struggle”.
Read more: German business confidence hits lowest level since 2014
He added that the poor reading “reinforces the likelihood that the European Central Bank could well cut rates deeper into negative territory when they next meet”.