German factory orders slump 4% in June
German factory orders tumbled in June as overseas demand was hit by deteriorating trade relations between the US and EU, according to data released by Destatis on Monday.
Factory orders fell 4% on the month versus a 2.6% increase in May, missing expectations for a 0.4% drop. Domestic orders were 2.8% lower, while foreign orders fell 4.7% in June on the previous month.
New orders from the euro area were down 2.7%, while new orders from other countries were 5.9% lower compared to May.
On the year, factory orders were down 0.8% versus expectations for a 3.4% rise and following a 4.4% jump the month before.
IG analyst Joshua Mahony said: "While the DAX is trading in the red in early hours, there is certainly going to be increased hope that the agreement between Juncker and Trump will ensure that this deterioration in June factory orders is an outlier rather than the new status quo."
Fiona Cincotta, senior market analyst at City Index, said: "The kneejerk interpretation is that the decline is directly linked to US trade tariffs, particularly because factory orders from outside the Eurozone have fallen by 6%. However, in May these same orders rose unexpectedly, as did the country’s manufacturing PMI - to a hefty 57.3.
"There is no doubt that Trump’s tariffs will have an effect on German industrial production, particularly its core car manufacturing business because US tariffs are specifically targeting European car makers. But there are other factors at play as German car makers have to step up to new car emission test standards in the wake of the Volkswagen debacle. German balance of trade data Tuesday and the first set of second quarter GDP numbers on Wednesday should shed some more light on the state of Europe’s biggest economy."