German factory orders race ahead in May

Client orders for German manufacturers piled up in May, despite a drop in those from outside the single currency bloc.

In seasonally and calendar-adjusted terms, total manufacturing orders shot up by 2.6% month-on-month, according to the Federal Office of Statistics, outpacing economists' forecasts for an increase of 1.1% by a wide margin.

However, while orders from other euro area nations grew by 6.7% in comparison to April, those from outside the Eurozone fell by 1.3%.

On a more positive note, orders for capital goods were 4.7% stronger, although the largest increase was seen in those for consumer goods, which rose by 4.9%.

Orders for so-called intermediate goods on the other hand declined by 0.6%.

Net revisions to prior months' data were worth 0.9 percentage points, according to Clause Vistesen, chief Eurozone economist at Pantheon Macroeconomics.

Revised data for April revealed a 1.6% drop month-on-month, which was up from a previous estimate of -2.5%.

"German manufacturing is down, but not out. This is a punchy headline and a solid beat, but the consensus always looked oddly low in light of very favourable base effects for the month-to-month headline," Vistesen added.

"Looking ahead, a year-over-year rate of 4.4% is somewhat above what is implied by the survey data—just as the April headline was well below—and probably can’t be sustained. Assuming a trend of about 3%, new orders dipped somewhere between 0.5 and 1.0% month-to-month in June."