German factory orders dropped 5.7% in August from July, after a 4.9% rise in July, seasonally and working-day adjusted. Domestic orders held up reasonably well, falling only 2%, but foreign orders plunged 8.4%, with new orders from the Eurozone down 5.7%, but orders from all other countries combined down 9.9%.
The two largest of those non-Eurozone export destinations are the US and China!
While orders for consumer goods were up 3.7%, manufacturers of intermediate goods saw orders drop by 3%, according the Destatis. And manufacturers of capital goods saw their orders plummet 8.5%.
The monthly fluctuations can generate a lot of noise, but here is a long-term chart from David Powell, Euro-area economist at Bloomberg. It throws a dark shadow over the future of the German miracle economy – which is terribly vulnerable to exports. The chart compares the year-over-year GDP growth rate (red) and factory orders (black), with factory orders leading GDP growth by one quarter.
And it looks like the German economy, which is supposed to pull the Eurozone out of its funk, is sinking into a funk of its own:
Factory orders suggest German economy will fail to rebound before end of yr. They lead German GDP growth by one qtr. pic.twitter.com/7QZn5zZRAx
— David Powell (@davidjpowell24) October 6, 2014
The German stock market is already rolling over, down 8.4% since its peak earlier this year. And now the IPO market too? This shouldn’t have happened. Where is the euphoria? Read… IPO Mania Collapses in Germany