Unexpected weakness in Germany's manufacturing orders in May signals ongoing uncertainty in industrial demand, despite a yearly rise and sector-specific gains.

Germany’s new factory orders declined by 1.4% month-on-month in May, exceeding market expectations of a 0.2% drop, according to provisional figures published by the Federal Statistical Office (Destatis) on Friday.

Excluding large-scale orders, the monthly fall was steeper at 3.1%, underlining broader weakness in manufacturing demand.

The downturn was led by a significant 17.7% fall in new orders in the manufacture of computer, electronic and optical products. Other sectors that contributed to the decline included electrical equipment and basic metals, which saw order reductions of 6.2% and 5.1%, respectively.

Some sectors, however, reported growth. Orders for fabricated metal products surged by 18.2%, while the manufacture of other transport equipment saw a 6.8% increase, helping to offset broader declines.

By category, capital goods orders dropped by 0.9%, and intermediate goods fell by 3.4%, while consumer goods bucked the trend with a 3.1% monthly increase.

Despite the monthly contraction, factory orders in May were up 5.3% year-on-year. Additionally, Destatis revised April’s monthly figure upwards to a 1.6% gain from the previously reported 0.6%, citing late data submissions from the automotive sector.

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