Monthly industrial demand experienced a six-sequential decline.
Germany's industrial order books have shrunk for the sixth month in a row in June, according to the Federal Statistical Office. There was a minor drop of 0.2% in outstanding orders compared to May. While domestic orders saw a modest 0.6% increase, foreign orders slipped by 0.7%. Consequently, overall orders decreased by 6.2% compared to June last year.
The decline was primarily attributed to the mechanical engineering sector, which witnessed a decrease of 0.9% in its order backlog. Similarly, the automotive industry saw a 0.7% drop - marking the 17th consecutive decline. However, the 'other vehicle manufacturing' sector, which encompasses aircraft, ships, and trains, showed a positive growth of 1.7%.
The coverage of order backlog in Germany's industry remained the same at 7.2 months in June. This figure signifies how many months companies could theoretically continue production at a steady rate without new orders to clear their existing demand.
For manufacturers of investment goods such as machinery and plants, the coverage remained unchanged at 9.7 months. Similarly, the coverage for producers of consumer goods stayed at 3.5 months, while that for intermediate goods was at 4.1 months.
Despite looming recession fears, Germany's industry managed to register its first order growth for the year in June. Surprisingly, new orders surged by 3.9% compared to May, driven by a surge in domestic demand. Economists polled by Reuters had anticipated a mere 0.5% increase, having witnessed five consecutive declines prior to this.**
The reported decrease in overall orders might lead some companies to closely follow their remaining inventory levels to avoid overstocking. After observing the 17th consecutive decline in the automotive industry, analysts may choose to closely follow its future performance to gauge potential market trends.
