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German factory orders tumble amid supply chain issues
By Michele Maatouk
Date: Wednesday 06 Oct 2021
LONDON (ShareCast) - (Sharecast News) - German factory orders slid in August amid supply chain issues, according to figures released on Wednesday by Destatis.
Factory orders tumbled 7.7% on the month following a 4.9% increase in July, missing expectations of a 2.1% decline.
On the year, orders were 11.7% higher in August following a 26.1% jump the month before. This was below expectations for a 33.7% increase.
Compared to February 2020, the month before Covid-related restrictions kicked in, order intake was 8.5% higher.
Domestic orders fell 5.2% on the month in August, while foreign orders were down 9.5%. Incoming orders from the eurozone rose 1.6%, while orders from the rest of the world were 15.2% lower. At the manufacturers of intermediate goods, incoming orders fell 2.8% compared to July, while the makers of capital goods saw an 11.1% decline. In the consumer goods sector, orders fell 2.7%.
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said German manufacturing hit a brick wall in the third quarter and GDP growth downgrades are coming soon.
"This isn't a pretty headline, but first things first; we have to account for volatility in major orders, primarily in construction and large transport equipment. Excluding this component, new orders declined by 5.1% on the month. Last month, new orders fell by 0.2% excluding this component, but that was before today's revision.
"That said, it is fair to say that these data now suggest underlying demand in German manufacturing weakened significantly in Q3," he said, adding that the headline was pegged back by weakness in both domestic and external demand.