Back in the UK, car sales have crept up in July, despite a drop in demand for diesel cars again.
Some 163,898 new cars were registered last month, up 1.2% year-on-year, the Society of Motor Manufacturers and Traders reports.
Diesel registrations slumped by nearly 25% compared with July 2017, as the knock-on effect of the emissions scandal lingers.
Petrol car sales jumped by 20%, while electric car sales jumped 21% - giving them 6.5% of the market.
Ian Plummer, director at Auto Trader, reckons car buyers got some good deals last month:
“Manufacturers have been racing to clear stock before new regulations on fuel economy and emissions take effect in September, resulting in some great opportunities for consumers.”
Reuters reports that the Chinese media turned up the heat on Donald Trump over his trade policies:
The overseas edition of the ruling Communist Party’s People’s Daily newspaper singled out U.S. President Donald Trump in an editorial on Monday, saying he was starring in his own “street fighter-style deceitful drama of extortion and intimidation”.
Such a move, though, might trigger fresh retaliation from Washington.
Yesterday, president Donald Trump claimed that his tariffs were working, indicating that he isn’t planning to change his trade policies:
Tariffs are working big time. Every country on earth wants to take wealth out of the U.S., always to our detriment. I say, as they come,Tax them. If they don’t want to be taxed, let them make or build the product in the U.S. In either event, it means jobs and great wealth.....
..Because of Tariffs we will be able to start paying down large amounts of the $21 Trillion in debt that has been accumulated, much by the Obama Administration, while at the same time reducing taxes for our people. At minimum, we will make much better Trade Deals for our country!
The drop in German factory orders was much steeper than expected, says Bloomberg:
Orders fell 4 percent from the previous month -- eight times as much as forecast in a Bloomberg survey of economists -- and the 0.8 percent drop from a year ago was the first annual decline since July 2016.
The fact that every single category fell - be that domestic, Eurozone & Non-Eurozone or Capital Goods, Consumer Durables or Intermediate Goods - looks to be highly anomalous, in so far as there is rarely ever a month where there is a “parallel shift” down, barring events such as the global financial crisis of 2008.
As such, he expects a sharp bounceback in July. Alternatively, today’s data might be revised up.
Economist Fred Ducrozet of Pictet Bank points out that ‘core’ German factory orders also fell in June:
Huge drop in German new orders (-4.0% MoM, third largest in ten years). Almost too big to be true, but the setback looks broad-based at first sight. https://t.co/FM3CKAVf8P
Here's the chart with German 'core' factory orders (excluding major orders). Not great, but slightly less terrible than the headline numbers. pic.twitter.com/VimwVQYbFG
The FT’s Camilla Hodgson writes that trade tensions are a factor:
The data covers a month when the transatlantic trade relations between the US and the European Union were worsening, ahead of a meeting between US President Donald Trump and European Commission President Jean-Claude Juncker in July.
Carsten Brzeski of Dutch bank ING also believes Germany is being buffeted by rising trade tensions.
Here’s his take on today’s data:
German industrial orders took a severe hit in June, dropping by 4% month-on-month, from [up] 2.6% month-on-month in May. On the year, new orders were down by 0.8%.
Even though new orders data are highly volatile, the June report could be a tentative sign of how trade tensions are hitting the German economy. Foreign orders from outside the eurozone dropped by almost 6% MoM.
At the same time, domestic orders decreased by 2.8% MoM. With the sharpest drop since January 2017, today’s new orders data do not bode well for German industry going into the second half of the year.
German industrial orders took a severe hit in June, which could be a sign that trade tensions are starting to bite, says @CarstenBrzeskihttps://t.co/vqvdajiafI
Oliver Rakau of Oxford Economics says today’s German factory data is “horrendous”, and a sign that economic uncertainty is dampening demand.
Today's horrendous factory orders all but confirm that German industry has a tough H2 ahead as uncertainty starts to bite and the automotive sector has to deal with new emission test standards.
Decline of German June factory orders was broad based across sector & regions. This was a bad report even accounting for the usual monthly volatility. In my view, an important reason is that uncertainty has begun to bite weighing esp. on investment goods orders. pic.twitter.com/oV07vKZIPM
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Donald Trump’s trade wars appear to be biting.
New data show that German factory orders slumped by 4% in June, the biggest fall in almost 18 months.
The decline was driven by weaker overseas demand, with orders from outside the eurozone slumping by 5.9%. Domestic orders dropped by 2.8%, while orders from other euro countries declined by 2.7%.
German factory orders Photograph: Destatis
Orders for capital goods and consumer goods were particularly weak, falling 4.7% and 4.5% respectively.
This monthly data can be volatile, but such a big decline suggests that the tariffs imposed by America in recent months are hurting global trade.
Germany’s Economy Ministry said that industrial orders fell by 1.6% in April to June, and singled out president Trump’s politics, saying:
“Regarding the latest development, uncertainty caused by trade policy probably played a role.”
Given the size of Germany’s manufacturing base, this data may highlight wider problems building in the world economy...
I’ll pull together some reaction now.
Also coming up.
HSBC, Europe’s largest bank, has posted strong-looking results this morning. Pte-tax profits rose $10.71bn for the first half of the year, beating analyst expectations. More on that shortly...
In UK retail, House of Fraser is pressing on with plans to shut more than half its stores after settling a legal row with a group of landlords last night. That breakthrough means the remaining outlets cold still be saved
We’re also expecting the latest UK sales, plus a new survey of investor morale in the euro area.
European stock markets are expected to start the new week quietly, as the August lull kicks in.
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