Is Slowing Germany Manufacturing Sector a Global Leading Indicator?

German factory orders unexpectedly fell in July as demand in the euro region weakened, indicating the recovery in Europe’s largest economy is losing momentum.
Orders, adjusted for seasonal swings and inflation, declined 2.2 percent from June, when they surged a revised 3.6 percent, the Economy Ministry in Berlin said today. That’s the biggest drop since February 2009. Economists forecast a 0.5 percent gain, according to the median of 40 estimates in a Bloomberg News survey. From a year earlier, orders climbed 18 percent, when adjusted for working days.
Evidence of slowing growth comes after the German economy expanded at the fastest pace in two decades in the second quarter, boosted by exports. An index of manufacturing fell in August and investor confidence dropped to a 16-month low. Still, Daimler AG, the world’s second-biggest manufacturer of luxury cars, said yesterday that sales jumped in August.
“It’s a sign that Germany can’t decouple from the global economy,” said Alexander Koch, an economist at UniCredit in Munich. “While this is a backlash against last month’s surge and monthly figures can be volatile, the economy simply can’t continue to grow at the same pace as in the first half of the year.”