German Factory Orders Plunge 11.3% in January Despite Auto Sector Boost

On Thursday, the German economy was under the spotlight again after better-than-expected trade data on Wednesday. German factory orders garnered investor interest early in the European session.

German Factory Orders

Factory orders tumbled 11.3% in January after surging 12.0% in December. Economists forecast German factory orders to decline by 6.0%.

According to Destatis,

• Orders for capital goods slid by 13.1%, with orders for intermediate goods down 9.3%.
• Consumer goods orders declined by 5.7%.
• Significantly, orders from overseas were down 11.4%, with orders from the Eurozone tumbling 25.7%.
• Orders from outside the Eurozone bucked the trend, rising by 1.6%, while domestic orders declined by 11.2%.
• The automotive industry saw incoming orders increase by 4.2% after falling by 5.8% in December.
• Orders for the manufacture of electrical equipment (-33.2%), other vehicle construction (-27.3%), and metal products (-14.5%) impacted the headline figure.

German Economic Indicators Sent Mixed Signals

Factory orders reversed course in January, suggesting a slump in demand at the start of Q1 2024. The numbers contrasted with trade data for January. Imports and exports increased by 3.6% and 6.3%, suggesting an improving demand environment. The outlook for the German and Eurozone economies will hinge on the February numbers, which could influence the ECB rate path.

EUR/USD Reaction to the Economic Indicators from Germany

Before the German factory order numbers, the EUR/USD fell to a low of $1.08932 before rising to a high of $1.09073.

In response to the numbers, the EUR/USD fell to a low of $1.08998 before rising to a high of $1.09043.

On Thursday, the EUR/USD was up 0.03% to $1.09023.

Next Up

On Thursday, the ECB monetary policy decision and press conference are the main event for the EUR/USD. Economists expect the ECB to leave interest rates at 4.5%, placing the ECB press conference under the spotlight.

ECB staff projections and views on the timeline for interest rate cuts need consideration.

From the US economic calendar, US jobless claims and the Fed will draw investor interest. Fed Chair Powell will deliver a second day of testimony, with FOMC member Loretta Mester also on the calendar to speak.