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Thursday, September 4, 2008

German Manufacturing: Longest-Ever Declining Streak

… EXTENDING THEIR LONGEST-EVER DECLINING STREAK…

If you think equities can mount a serious rally from here, just because oil is down a bit, you’ve got to be nuts. The damage has been done. Its recession time.

German Orders Unexpectedly Drop, Extend Losing Streak (Update2):German factory orders unexpectedly fell in July, extending their longest-ever declining streak and increasing the likelihood that Europe's largest economy is heading for a recession.

Orders, adjusted for seasonal swings and inflation, slid 1.7 percent from June, the Economy Ministry in Berlin said today. Economists expected a gain of 0.3 percent, the median of 35 forecasts in a Bloomberg News survey showed. Orders slid 0.7 percent from a year earlier.

Germany's economy contracted 0.5 percent in the second quarter and may not recover in the third as exports falter and consumer spending slumps. Even though oil prices have retreated 24 percent since a July record, business confidence declined to a three-year low last month and consumer optimism fell to the lowest level in five years.”

6 comments:

Alessandro said...

You better don't ask me, but you did I'd say S&P 500 has just broken down and out.

Ben Bittrolff said...

Alessandro,

It did. When 1262.50 broke on the SEP08 Futures contract, it dropped straight to 1252.50 before even slowing down... Take a look at the intrada charts. Fast and furious.

I'll be updating those charts tonight.

Rebecca Wilder said...

Great article! I agree, this is really bad news for Germany. Germany is reliant on export growth to maintain expansion, and declining manufacturing is certainly indicative of a bad Q3 export number. In fact, Germany exports more than the US does. In June, Germany exported about $US19 billion more goods than did the US.

Alessandro said...

Ben,

I saw it live. That was something.

Rebecca Wilder said...

Looked at the numbers a little closer. Most of the decline occurred in domestic orders, where foreign orders rebounded 0.3% following June’s sharp decline. However, declining manufacturing exports may not be far behind with continuing strength in the euro and weakening European economies.

Rebecca

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