Germany’s DAX index inched lower on Monday ahead of the German ZEW Economic Sentiment for July. French CAC 40 index as well as Euro STOXX 50 index were in the red. UK’s FTSE 100 index was on a standstill ahead of the country’s Construction Purchasing Manager Index (PMI) for June.
German Economic Outlook
German Factory Orders
The German Factory Orders for May slipped 3.7% MoM from the previous 1.2% increase in April. This was weaker than the estimate forecast for a 1.0% increase. It also saw the DAX index dip.
The new manufacturing orders rose 54.3% YoY in the same month. This was lower than the 80.2% YoY increase in April.
According to the Federal Statistics Office, new orders in May were 6.2% higher than February 2020. February last year was before the Corona virus pandemic.
Domestic orders were up 0.9% while foreign orders declined 6.7% in May 2021 compared to the previous month. New orders from the Euro Zone slipped 2.3% while new orders from other countries dropped 9.3% compared to April the same year.
In May 2021, new orders for intermediate goods decreased 3.6% compared to the previous month. New orders for capital goods declined 4.6% while new orders for consumer goods surged 3.9%.
German Construction PMI
The German Construction PMI for June was up to 47.0 from the previous 44.5 in May. Supply bottlenecks impeded Germany’s construction sector in June. This dragged the output and new orders. Demand for goods was jammed by rising price pressures.
Declines in activity were linked to shortages of building materials and products. Constructors’ purchases took a dive for the second consecutive month. According to the latest data, there was a sharp lengthening of input lead-times.
The decline of new orders at German constructors heavily weighed on activity. The rate of contraction sped up in June and was the sharpest decline in 12 months.
Construction costs surged in June with input price inflation rates edging higher for the third consecutive month. Despite their supply shortages, some of the key boosters in cost increases include insulation, timber, plastics, and steel.
Constructors noted a further decline in employment numbers at the end of the second quarter. The decrease in payroll numbers was modest, however, was the sharpest in three months. Looking ahead, constructors’ expectations for activity over the next 12 months remained negative.
DAX Index Performers
Among the best performers in the DAX index include Heidelberg cement, Vonovia and Merck. Heidelberg cement was the best performer gaining 2.13% in its stock earnings. The rest gained 0.57% and 0.50% respectively.
Continental AG, Siemens AG, and Daimler led the laggards in the index. Each declined by 1.75%, 1.40% and 1.54% respectively.