German new orders increased in August on the back of stronger domestic demand.
New orders increased by 1.0% MoM in August, the sharpest monthly increase since March this year. On the year, new orders were up by 2.1%. The August increase was driven by stronger domestic demand (+2.6%) and demand from Eurozone peers (+4.1% MoM). At the same time, however, the Brexit vote still left some marks with new orders from non-Eurozone countries dropping by 2.8% MoM.
Today’s numbers bring some relief for German industry but are still far too little to become overly optimistic about the outlook for industrial production. In fact, German industry is still running low on fuel. New orders have literally been stagnating since last winter and even after today’s increase, domestic orders are still under-performing. Unless we see an entire series of similar data in the coming months, German industry will have troubles shifting to a higher gear.