August 6, 2019 / 6:36 AM / a month ago

No turning point for German industry after strong June orders - ministry

FILE PHOTO: A steel worker of Germany's industrial conglomerate ThyssenKrupp AG works near a blast furnace at Germany's largest steel factory in Duisburg, Germany, January 28, 2019. REUTERS/Wolfgang Rattay/File Photo

BERLIN (Reuters) - German industrial orders exceeded expectations in June but that was mainly due to a jump in bookings for big-ticket items and the economy ministry said this sector of Europe’s biggest economy has not yet reached a turning point.

The export-oriented German economy, facing headwinds from trade disputes, a cooling global economy and Brexit uncertainty is widely expected to have contracted in the second quarter.

It is being dragged down by the manufacturing sector, which accounts for about a fifth of the economy.

Contracts for ‘Made in Germany’ goods rose 2.5% from the previous month, the biggest increase since August 2017, the ministry said, driven by an 8.6% increase in demand from non-euro zone countries. That was supported by bookings for big-ticket items.

That beat a Reuters consensus forecast for a 0.5% increase but the ministry said domestic orders fell by 1.0%. Adjusted for big ticket items, orders overall would have fallen by 0.4%.

It also said while the downward trend in industrial orders had slowed noticeably in the second quarter, sentiment indicators pointed to no economic turning point for industry just yet.

“The decent increase in June is good news, but is no cause for immediate celebration. In view of the trade conflicts, humility is required,” said Thomas Gitzel, economist at VP Bank.

He added that the decline in domestic orders rather pointed to a recession in Germany.

Additional reporting by Klaus Lauer; Reporting by Madeline Chambers; Editing by Michelle Martin

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