German factory orders plunge 10.6% in August, hitting recovery hopes

Provisional figures released on Tuesday reveal that German factory orders contracted sharply in August, slipping 10.6% compared with July and far exceeding the modest 1% decline forecast by analysts. The downturn represents the first monthly fall in four months and was largely caused by a steep drop in large-scale domestic orders, with the category that includes military vehicles, aircraft, ships and trains plunging by more than 60%.

The economy ministry called the data a "marked setback" but added that, absent the slump in big orders, the overall order situation was virtually unchanged from the previous month. While the August dip was notable, new orders over the June-August quarter were still 1.3% higher than in the preceding three-month period. The report highlights the volatility of public procurement, especially as Germany ramps up defence spending amid geopolitical tensions, and comes as leading economic institutes have recently raised their growth forecast for the year to 1.3%.