Auto orders decline 12.5% as Volkswagen announces 50,000 job cuts

Destatis reported the July increase alongside divergent signals across the manufacturing economy. Intermediate goods orders jumped 4.3%, while consumer products orders declined 4.8%. The split suggests intermediate goods are not being turned immediately into finished products, which could mean some of the recent upturn reverses in the second half of the year, according to the report.

Auto industry orders fell 12.5% on the month. Headwinds could emerge from the country’s traditionally key car industry, the report noted.

Separately, Volkswagen’s board approved 50,000 additional job cuts and a halving of the company’s model portfolio on Thursday as it pivots its strategy amid competition from Chinese automakers.

Nearly all of the broader July increase was driven by larger orders for transport equipment — the Destatis category that includes aircraft, ships, trains and military vehicles — the agency said. June orders were revised upward to a 3.7% increase.

Manufacturing PMI signals continued strength

Manufacturing purchasing managers’ surveys published this week showed production activity growth in August was the strongest since January 2022, driven by a jump in orders. Business expectations among manufacturers were the strongest since February, ahead of the first U.S.-Israeli strikes on Iran.

The Wall Street Journal reported that stockpiling may still be propelling the upturn, given supply constraints that have continued to weigh on activity with the closure of the Strait of Hormuz.

Ifo raises growth outlook; ECB rate decision ahead

The Ifo Institute, a German economic think tank, raised its growth expectations for 2026 on Thursday, citing steadily improving orders and a recent climb in export expectations. The institute said the manufacturing sector is expected to contribute more to Germany’s economic growth than at the start of 2026.

Domestic demand climbed in July, and that factor is set to continue as hundreds of billions of euros in fiscal stimulus flow to defense and infrastructure projects.

The European Central Bank is expected to raise its key interest rate next week, a move that could squeeze financing conditions for some manufacturers.

Industrial-production data for July is due Monday, having risen for the three prior consecutive months.