German factory order growth drops way faster than expected

Germany factory orders have dropped by 2.6 per cent July, from five per cent growth last month (revised from 3.8 per cent).

Analysts had forecast a one per cent fall in orders this month. While the upwards revisions to the last are a positive, that makes for a much bigger drop than expected.

Domestic orders fell by 0.3 per cent from the previous month, with export orders down a whopping 4.5 per cent.

Christian Schulz, senior economist, Berenberg:

For exports, Germany’s traditional growth driver, the outlook is a bit brighter than it was in the spring. Germany’s most important export market, the Eurozone, is stabilising.

The US and the UK are growing nicely and China is also showing slightly more positive signs. Demand from these Top-4 markets should more than offset the dampening effect of the currency turbulences in many emerging markets and continued tough competition from Japan, where the weaker yen helps exporters.