Germany Factory Orders Expand Unexpectedly

(RTTNews) - Germany's factory orders expanded unexpectedly in July driven by the robust demand from non-euro area economies, data from Destatis revealed on Monday.

Factory orders grew 3.4 percent on a monthly basis, confounding expectations for a decline of 1 percent. However, the pace of growth was weaker than June's revised expansion of 4.6 percent.

New orders reached the highest level since the beginning of the time series in 1991, Destatis said. The marked month-on-month increase was caused by major orders. Excluding major orders, there was a decline of 0.2 percent in July.

The increase in July was solely due to a jump in the always very volatile orders for the "other vehicle" sector, Ralph Solveen, an economist at Commerzbank, said. The order boom in German manufacturing is losing more and more momentum, the economist added.

Domestic orders dropped 2.5 percent, while foreign orders went up 8.0 percent in July.

New orders from the euro area dropped 4.1 percent. By contrast, demand from other countries climbed 15.7 percent due to many major orders especially from the shipbuilding sector.

Manufacturers of intermediate goods reported a decrease of 0.5 percent. On the other hand, demand for capital goods rose 5.4 percent and orders for consumer goods gained 7.5 percent.

On a yearly basis, factory orders grew significantly by 24.4 percent in July, following a 26.5 percent increase in June.

Further, data showed that real turnover in manufacturing grew 1.9 percent in July after expanding 5.7 percent in June.