Merkel and EU Have Germany on Edge of Collapse

Merkel and EU Have Germany on Edge of Collapse

Industrial orders in Germany fell more than expected June, official data showed Tuesday, as global trade tensions weighed on Europe’s top economy.

New contracts at industrial firms plunged four percent month-on-month, federal statistics authority Destatis said in figures adjusted for seasonal swings, following a 2.6 percent increase in May.

Analysts surveyed by Factset had predicted a far smaller drop of 0.25 percent in June.

Analyst Carsten Brzeski from ING Diba bank described the June reading as a “cold summer shower”.

“Disappointing new orders data show tentative signs of trade tensions hitting the German economy, which doesn’t bode well for the industrial outlook in the second half of the year,” he said.

The June slump was led by orders from outside the eurozone, which were down nearly six percent.

Orders within Germany and the euro area fell nearly three percent.

The economy ministry in Berlin said that with the exception of the May rebound, order intakes had been “weak” so far this year.

“Uncertainty caused by trade policies may have played a role,” it said in a statement.

Companies around the world are nervously eyeing a deepening trade war between the United States and China, spurred by President Donald Trump’s “America First” agenda.

Trade relations between the US and the European Union are also tense after Trump imposed tariffs on metals imports, prompting retaliatory EU duties.

Trump has also threatened to slap hefty tariffs on foreign cars, which would badly hurt German auto makers.

Looking ahead, the German economy ministry was nevertheless optimistic about the second half of the year.

“The order backlog remains high and despite the cloudy spell, the business climate is clearly still positive.”

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S. Jack Heffernan Ph.D. Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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