German Industrial Orders Drop Sharply in July

Germany’s industrial sector suffered an unexpected setback in July, as new orders declined more than anticipated, driven largely by a drop in large-scale demand.

Headline Decline vs. Expectations

• Industrial orders fell 2.9% month-on-month on a seasonally and calendar-adjusted basis, the Federal Statistics Office reported Friday.
• This was far worse than the 0.5% increase expected in a Reuters poll of analysts.

Impact of Large-Scale Orders

• Excluding large-scale orders, new orders actually rose 0.7% from the previous month.
• This highlights the outsized impact that bulk or one-off industrial contracts have on headline figures.

Revised June Data

• June’s preliminary data was also revised. Orders were shown to have fallen 0.2%, compared with the initially reported 1.0% drop.
• The revision was due to corrected data from a major automotive company.

Broader Trend

• On a less volatile three-month basis, new orders between May and July were 0.2% higher than in the February–April period, indicating some stability despite July’s sharp monthly fall.

Outlook

The weak July headline figure underscores the fragile state of Europe’s largest economy, already struggling with shrinking GDP (-0.3% in Q2) and slowing consumption. While underlying demand excluding bulk orders showed modest improvement, the volatility in large-scale contracts continues to cloud the near-term outlook for German industry.