Despite Revision, German Factory Orders Weaker Than Expected
THE TAKEAWAY – German factory orders lower than expected -> weak numbers underscore risk averse trend -> Euro drops as ECB decision coming up
German factory order data for August, released today, showed a drop of -1.4% versus the forecasted flat number. The drop was slightly offset by a revision to July’s figure, raised to -2.6% from -2.8%, but remains bad news for German industry. The annual front also showed sub-prediction figures, coming in at 3.9% versus the expected 4.7%. Here also the loss was slightly alleviated by a revision of the previous number from 8.7 to 8.9.
The weak numbers underscore the weakness of the beleaguered Eurozone economy given the possibility of a credit breakdown should Greece default on loans. Concerns that the current crisis may escalate into a recession have given investors cold feet, shaking confidence in a market that is already experiencing turmoil not seen since the 2008 crash. German PMI manufacturing numbers released earlier this week hit a two-year low, and analysts have blamed low German manufacturing numbers on reductions in exports and domestic demand. Domestic orders were particularly weak at -3.2% in Aug, while foreign orders only rose 0.1%. Other European nations have born similarly weak industrial fruit.
The immediate market reaction showed a hefty drop at the report’s release, and further drops may come later today with the ECB’s decision on interest rates coming up. For full technical outlook
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