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Prospects daily: German factory orders turn down in May

Global Macroeconomics Team's picture

Important developments today:

1.  German factory demand slips for the first in five months

2.  Euro Area GDP up 0.8% in first quarter (saar), unchanged from first readings

3.  U.S. mortgage applications for refinance jump in latest week



German factory demand slips for the first in five months. Orders for German manufacturers fell for the first time in five months in May, as the Euro Area’s unfolding debt crisis restrained demand across the region. Seasonally adjusted orders fell 0.5% (m/m) from April, following a downwardly revised 3.2% gain for the previous month, according to the latest report from the Economy Ministry. Domestic orders dropped 0.6% (m/m), however in large part the decline in demand was led by a 3.3% (m/m) decrease in orders from other Euro Zone countries, which weighed heavily on total orders, causing them to drop by 0.3% (m/m). External orders from outside the Euro Zone increased 1.8%, indicating that the German economy continues to benefit from strong demand for investment goods from East Asia and other emerging regions.


Source: Economy Ministry


Euro Area GDP up 0.8% in first quarter (saar), unchanged from first readings. Strength in exports, government outlays and a build in inventories served to maintain GDP growth at a modest 0.8% annualized rate in the first three months of the year (saar), offsetting decline in domestic consumption and business investment. A buildup in stocks contributed a full 4 percentage points to GDP at an annual rate, as colder weather in Europe left goods produced in the quarter standing unsold in warehouses. Exports were supported in part by the start of euro depreciation, and gained 8.6%, though modest by recent double-digit standards; imports moved higher by 14.3% (saar).

Though most analysts believe that the second quarter will show stronger performance, largely on the back of continued strong export gains, focus has now settled on the second half of 2010, when the effects of recent fiscal/debt difficulties will come to play a bigger role in shaping GDP growth.


U.S. mortgage applications for refinance jump in latest week. According to the U.S. Mortgage Bankers Association, the number filing new applications for mortgage refinance jumped 6.7% last week to the highest reporting levels since October, as more people took advantage of lower mortgage rates to refinance. At the same time the number of mortgage applications for purchase declined 2%, reflecting the expiry of incentives and tighter credit criteria for home purchase.


Among emerging markets:

In Latin America and the Caribbean, Brazil’s consumer prices were flat in June, and inflation slowed to 4.84% on a year-on-year basis, the lowest since February, as food prices fell more than expected. Chile’s economic activity expanded 7.1% year-on-year in May, the fastest annual pace in five years, and increased a seasonally adjusted 1.4% from April. Colombia’s annual inflation rate was 2.25% in June, as prices rose 0.11% in June from the previous month. Uruguay’s consumer prices increased 6.19% year-on-year in June, as prices climbed 0.28% from May.

In Central and Eastern Europe and the CIS, Russia’s consumer confidence increased 3 percentage points to minus 7, marking the least pessimistic sentiment since the third quarter of 2008, as an increasing number of consumers expect their personal finances to improve over the next twelve months. Estonia’s consumer price inflation accelerated to 3.5% in June from 3% in May, reaching the fastest pace in 17 months, on higher prices of electricity and mobile phone services.


Submitted by Anonymous on
The post says factory orders fell from April to May, but the graph shows the opposite...

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