Uncertainty over the US-EU trade agreement drags down Germany's industrial orders, which unexpectedly fell month-on-month in June
Due to the unclear prospects of the US-EU trade agreement, Germany's industrial orders fell by 1% month-on-month in June, marking a decline for the second consecutive month and falling short of market expectations. Although domestic demand remains stable and orders from the Eurozone have increased, the rise in US tariffs has put pressure on German industry. The German Ministry of Economy pointed out that uncertainty in trade and geopolitics has led to fluctuations in orders. Despite the challenges, the German government's fiscal commitments and corporate investment plans bring hope for economic growth, with GDP growth expected to remain stable in the third quarter
According to Zhitong Finance APP, due to the unclear prospects of the US-EU trade agreement in June, Germany's industrial orders fell for the second consecutive month in June. Data shows that Germany's industrial orders decreased by 1% month-on-month in June, falling short of the market expectation of a 1.1% month-on-month increase, with the revised previous value showing a month-on-month decline of 0.8%.
Data indicates that domestic demand in Germany remained stable in June, with orders from the 20 countries in the Eurozone also increasing. As a core part of Germany's manufacturing sector, machinery manufacturers received a significant increase in orders from the Eurozone in the first half of the year, indicating that they have shifted their focus away from the United States.
This data highlights Germany's fragile state after experiencing a recession for most of the previous two years. Although market confidence has gradually improved recently and manufacturing output has increased, the significant increase in US tariffs has become a reality. On July 27, local time, US President Trump stated that the United States had reached a trade agreement with the European Union, imposing a 15% tariff on goods exported from the EU to the US.
The German Ministry of Economy stated in a statement: "Given the ongoing high uncertainty in trade and geopolitics, it is not surprising that the number of orders remains strongly influenced by volatility." "As the increase in tariffs on goods exported to the US seems to be permanent, German industry may face a situation of weak foreign demand in the future."
However, the German government's fiscal commitments and plans by some major companies in the country to invest at least €100 billion have brought hope for accelerating economic growth. Economist Martin Ademmer stated: "We still believe that due to increased infrastructure and defense spending, Germany's GDP growth rate will remain stable in the third quarter and gradually gain momentum thereafter. After a growth of 0.3% this year, we expect Germany's economic growth rate to reach 1.0% by 2026."
The German central bank believes that growth momentum will eventually rebound. In June of this year, the German central bank projected that the economic growth rate would reach 0.7% in 2026 and accelerate to 1.2% in 2027
