German Factory Orders Hold Flat in May, OECD Leading Indicator Highlights Improved Outlook
German April manufacturing orders were unchanged m/m, against our survey median for a 1.0% m/m increase and compared to our own estimate for a 1.0% decline. Meanwhile, the already high March reading was revised up to 3.7% m/m from 3.3%. A breakdown of the April reading shows that capital goods orders fell 4.4% m/m, while consumer goods orders rose 2.6% m/m and intermediate goods orders rose 6.0% m/m. Today's April data, combined with recent improvements in the IFO suggest that the contraction in orders inflow has slowed, which backs expectations for a gradual stabilization of growth in the second half of the year.
Meanwhile, the OECD leading indicator rose to 93.2 in April from 92.7 in March. The OECD leading indicator for the G7 area also rose to 92.4 from a revised 92.0 in March. The OECD said it sees strong signs of a possible trough in U.K., France, Italy and Canada, as well as positive signs also emerging in Germany, Japan and the U.S. The OECD warned that it was still early to assess whether it is a temporary or more durable turning point and the signals remain tentative. In non-OECD economies the leading indicators still pointed to deteriorating conditions, but signs of a trough had emerged in China and India.
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