Surprising Surge in German Factory Orders in June

German factory orders experienced a surprising jump of 7% in June, making it the highest increase in three years, according to the latest data released on Friday. This significant growth caught economists off guard, as they were expecting a decline of 2%. Furthermore, the surge comes as a continuation of the positive momentum seen in May when revised figures indicated a rise of 6.2%.

The substantial increase in June has brought the year-over-year figure to a positive 3%, marking the first time it has been in positive territory since February 2022.

The driving force behind the surge in June's factory orders were large orders. If these were excluded, factory orders would have actually declined by 2.6%. Notably, "other vehicle construction" experienced a remarkable jump of 89.2%, attributing this to a major order within the aerospace industry. Airbus, with its Hamburg facility responsible for over half of the A320 aircraft production, played a significant role in this increase.

However, the order volume for motor vehicles and parts witnessed a decline of 7.3%.

Oliver Rakau, Chief Germany Economist at Oxford Economics, pointed out that the fact that core orders fell by 2.6% signifies a gloomy outlook for the industry in the near term.

As of now, the euro (EURUSD) remains steady at $1.0949, with investors closely watching for key U.S. jobs data which will be released later in the day.