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EU’s economic engine grinding to a halt | EU’s economic engine grinding to a halt |
(about 4 hours later) | |
German factory orders fell sharply in machinery, equipment, and miscellaneous vehicle production | German factory orders fell sharply in machinery, equipment, and miscellaneous vehicle production |
Factory orders in Germany dropped in April amid persistently high prices that caused a decline in large-scale purchases, data from the country’s federal statistics office Destatis showed on Tuesday. | Factory orders in Germany dropped in April amid persistently high prices that caused a decline in large-scale purchases, data from the country’s federal statistics office Destatis showed on Tuesday. |
Overall new orders in manufacturing fell by 0.4% from the previous month. The drop in bookings was smaller than in March, when they plummeted 10.9% from February, the biggest fall since April 2020 during the Covid-19 lockdowns. However, the decline was notable in comparison to last year’s figures, with orders plunging 9.9% versus last April. | Overall new orders in manufacturing fell by 0.4% from the previous month. The drop in bookings was smaller than in March, when they plummeted 10.9% from February, the biggest fall since April 2020 during the Covid-19 lockdowns. However, the decline was notable in comparison to last year’s figures, with orders plunging 9.9% versus last April. |
The data revealed significant differences in orders across industrial sectors. Bookings in machinery and equipment manufacturing fell 6.2% month-on-month in April, while miscellaneous vehicle construction, which includes ships, trains, aircraft, spacecraft, and army vehicles, showed a 34% plunge. These sectors had a particularly strong negative impact on the overall statistics, Destatis said. | The data revealed significant differences in orders across industrial sectors. Bookings in machinery and equipment manufacturing fell 6.2% month-on-month in April, while miscellaneous vehicle construction, which includes ships, trains, aircraft, spacecraft, and army vehicles, showed a 34% plunge. These sectors had a particularly strong negative impact on the overall statistics, Destatis said. |
New orders in the consumer goods and capital goods sectors also dropped, by 2.5% and 1.7% respectively. Electrical equipment and motor vehicles, on the other hand, saw respective gains of 12% and 2.4%. | |
Overall domestic orders were slightly up, by 1.6%. Foreign orders, meanwhile, dropped by 1.8%. | Overall domestic orders were slightly up, by 1.6%. Foreign orders, meanwhile, dropped by 1.8%. |
Analysts attribute the drop in manufacturing orders to elevated prices and tight monetary policy, which are dragging down demand. Germany has formally entered a recession after seeing two consecutive quarters of economic contraction. | Analysts attribute the drop in manufacturing orders to elevated prices and tight monetary policy, which are dragging down demand. Germany has formally entered a recession after seeing two consecutive quarters of economic contraction. |
Meanwhile, the German Economy Ministry said that the country’s “export-oriented economy is suffering particularly from the still weak global economy and the decline in orders from the euro area.” | Meanwhile, the German Economy Ministry said that the country’s “export-oriented economy is suffering particularly from the still weak global economy and the decline in orders from the euro area.” |
According to economists at Commerzbank, the existing order backlog may be sufficient to support German industry “for a few months.” However, given the dearth of new orders, industrial activity is likely to see “a significant decline” in the second half of the year. | According to economists at Commerzbank, the existing order backlog may be sufficient to support German industry “for a few months.” However, given the dearth of new orders, industrial activity is likely to see “a significant decline” in the second half of the year. |
“Industry is then likely to play a major role in causing the German economy to contract again.” | “Industry is then likely to play a major role in causing the German economy to contract again.” |
For more stories on economy & finance visit RT's business section | For more stories on economy & finance visit RT's business section |
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