German Factory Orders Rose 4.4% in September After August Slump

what happened

German manufacturing orders rebounded in September, partly reversing the steep decline of the previous month. According to the statistics office Destatis, orders rose 4.4% month on month after falling 10.1% in August. A consensus of economists polled by The Wall Street Journal had expected an increase of 4.3%.

According to Dow Jones Newswires, the main driver was the automotive industry, which picked up after two weak months marked by production changeovers and factory holidays. Orders for machinery and equipment also rose substantially, while new orders for other transport equipment, including aircraft, ships, trains and military vehicles, fell sharply. Excluding large-scale orders, new orders were up 5.1% on the month.

why it matters

German industry is so far absorbing the energy shock from the war between the US and Iran, but risks are growing. Factory input price inflation hit a five-month high in October, and the ECB has raised rates twice since the conflict began, with some expecting another hike in December. The signals are mixed for the euro and German equities.

market impact

Euro and DAX: strong orders support hopes for recovery, while costly energy and possible ECB tightening weigh.

• ↔Euro mixed — strong orders support the economy, but expectations of another ECB rate hike pull the currency up
• ▲DAX pressure up — rising orders in autos and machinery support expectations of an industrial recovery

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