German factory orders fell 10.6% in August, far exceeding the expected 1.0% decline, according to Destatis. The drop was driven by a 61.5% plunge in demand for aircraft, ships, trains, and military vehicles, which had more than doubled in July due to large contracts. Excluding these volatile big-ticket items, orders declined only 0.1%.
The downturn reflects ongoing pressure from elevated energy costs due to the Middle East conflict, though economists note the impact on short-term production is limited. Despite the decline, manufacturing sentiment rose in September to its highest level since May 2023, and major institutes raised Germany’s 2024 growth forecast to 1.3%. Higher interest rates and bond yields continue to weigh on investment, but policymakers may delay further rate hikes if inflation and demand remain weak.
Economists expect a reversal in the fourth quarter as government contracts increase.
Source: Wall Street Journal Markets · Summarized by HeadlinesBriefing