German industrial orders decline again in May

FRANKFURT

German factory orders fell for a fifth consecutive month in May, official data showed on Thursday, the latest sign that the recovery in Europe's biggest economy was struggling to gain momentum.

New orders, closely watched as an indicator of future business activity, dipped by 1.6 percent month-on-month, according to federal statistics agency Destatis.

The decline surprised analysts, who had been expecting an uptick in orders.

It was led by a 2.8-percent fall in demand from abroad, while domestic orders rose by 0.5 percent.

"Together with the recent deterioration in business expectations in the manufacturing sector, the continuing decline in incoming orders" points to "rather subdued" industrial activity in the months ahead, the Economy Ministry said in a statement.

"Order intakes are only likely to stabilise once global trade recovers further and demand for industrial products gradually picks up."

Export powerhouse Germany, traditionally a driver of European growth, has been struggling since Russia's invasion of Ukraine in 2022 sent energy prices soaring.

The crucial manufacturing sector has been hit particularly hard, contributing to a downturn that saw the economy shrink in 2023.

Easing inflation and lower interest rates are expected to drive a modest recovery this year, with the German government forecasting growth of 0.3 percent.

But Germany's rebound will be sluggish compared to the wider 20-nation eurozone, which the European Union predicts will expand by 0.8 percent in 2024.