German economy suffers further setback as factory orders fall for fifth consecutive month

Germany’s economy took a further hit after official figures showed factory orders fell for a fifth straight month in May.

The 1.6 percent drop from the previous month surprised economists, who had expected a 0.5 percent increase.

New orders fell by 8.6 percent compared to the same month last year.

The figures highlight the crisis facing Europe’s largest economy under its fragile coalition government led by Olaf Scholz’s Social Democrats, which is facing a rise in the far right.

Alexander Krueger, chief economist at Hauck Aufhaeuser Lampe Privatbank, said: “The downward trend is still in full swing.”

The manufacturing sector, which accounts for about a fifth of the German economy, has been hit by a series of crises, including the war in Ukraine, which has reduced access to cheap Russian gas.

Its powerful auto industry is also in crisis amid the transition to electric vehicles.

Trade relations with China, which is experiencing its own economic problems, are another headache.

Germany’s latest official figures come after a separate survey of purchasing managers’ indexes this week suggested gloom in the country’s manufacturing sector would extend into June.

It showed a decline to 43.5, from 45.4 in May, a measure where 50 separates growth from contraction.

In contrast, UK figures showed manufacturers were enjoying their strongest period of growth in more than two years, although this slowed slightly last month.