Germany's manufacturing malaise continues as orders slide again
7 May 2024 15:42
Orders in Germany's manufacturing sector fell by 1.9 per cent year-on-year in March, with a monthly decrease of 0.4 per cent. "The German manufacturing sector has experienced a decline in orders for the third consecutive month," reports the daily "Handelsblatt". This trend dampens expectations for GDP growth.
A continued trend of disappointing economic data emerges from Germany. Orders in the manufacturing sector decreased in March by 1.9 per cent from the previous year and 0.4 per cent from the previous month.This marks the third month in a row of decline, according to the "Handelsblatt" journal, which also notes that February's figures have been revised downward to an 8.8 per cent year-on-year decrease.
XTB analysts have shared their insights on the data. "The figures from the German economy are underwhelming. Despite exports performing better than expected, growing at 0.9 percent month-on-month (against a forecast of a 0.3 percent increase), an unforeseen rise in imports (0.3 percent month-on-month) has resulted in a foreign trade balance lower than anticipated," they commented.
They highlighted that the most unexpected outcome was the manufacturing sector's orders, which fell by 0.4 percent month-on-month, contrary to the anticipated increase of 0.4 percent. "Following these developments, the euro has weakened against the dollar, dropping to its lowest level since the weekend at 1.0764," they remarked.
Does Germany face a bigger economic problem? A troubling sign
The German media view this data as an ominous sign. "It's a troubling indicator for the already waning hopes for the German economy. The manufacturing sector in Germany has continued receiving fewer orders in March, perpetuating the decline that began in 2022," comments "Handelsblatt".
"The dampened expectations for economic growth of 0.2 percent in the first quarter being the start of a sustained recovery are highlighted. In the upcoming months, a decrease in production is anticipated," Ralf SolVin of Commerzbank noted in his analysis, as quoted by the journal.
The latest data from the German economy and the eurozone: What does the PMI reveal?
The most recent data released in early May concerning the PMI underscores the ongoing weakness in the industrial sectors of Germany and Europe. According to S&P's latest report, the industrial sector in Germany continues to struggle significantly. Although the PMI for this sector slightly increased from 41.9 points in March to 42.5 points in April — surpassing the forecast of 42.2 points — it still remains well below the 50-point threshold, the marker distinguishing between growth and contraction.
Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, noted a stark contrast in Germany compared to the modest yet noticeable improvement in the industrial sectors of several other countries.
"Those hoping for optimistic signs from the industrial sector will find the situation somewhat discouraging," he observed.
He believes that the latest PMI figures for Germany "remain distinctly indicative of a recession," with new orders declining even faster. These recent figures corroborate the negative outlook.
