Germany's factory orders growth eased more than expected in July due to the double-digit fall in domestic demand, data from Destatis revealed Friday.

Factory orders increased 2.8 percent on a monthly basis, much slower than the 28.8 percent rise in June and economists' forecast of 5 percent increase.

New orders increased for the third straight month in July after posting a record contraction at the height of the covid-19 lockdown in April.

Domestic orders fell 10.2 percent in July, while foreign orders grew 14.4 percent on the previous month.

New orders from the euro area went up 7.3 percent and demand from other countries increased by 19.2 percent compared with June.

The economy ministry said after the initial recovery in May and the strong recovery in June, the process of catching up in new orders in manufacturing slowed in July.

It is likely to continue in the next few months, as indicated by the lower number of short-time working and the improved business expectations of entrepreneurs, the ministry noted.

Even though the sharp divergence between domestic and foreign orders makes it hard to derive a clear trend from today's data, Carsten Brzeski, an ING economist said. The hopes for a strong rebound stay alive, as much as the fears of a weak recovery after the initial rebound.

Orders for capital goods fell slightly by 0.4 percent, while that for consumer goods gained 0.2 percent. Intermediate goods demand grew by 9.5 percent.

New orders in the automotive industry increased 8.5 percent on the previous month. However, new orders were still 2.4 percent lower than in February 2020.

On a yearly basis, overall factory orders declined 7.3 percent in July, following a 10.6 percent decrease seen in June.

Data showed that manufacturing turnover climbed 5.2 percent on month, but slower than the 13.2 percent increase in June.

The Purchasing Managers' survey from IHS Markit showed that the manufacturing sector growth accelerated to a 22-month high in August. According to Markit, new orders increased in August underpinned by both domestic demand and sustained growth in export sales.

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