In August, German factory orders disappointed, falling for a second straight month, while the consensus was looking for a stabilization. Orders dropped by 1.4% M/M, after a 2.6% M/M decline in July, providing further evidence that the German industrial sector is sharply losing steam. The details show that softness was domestically based (-3.2% M/M), while foreign orders broadly stabilized (0.1% M/M). The sector breakdown shows that weakness was based in computers & electronics (-6.1% M/M), engineering (-5.4% M/M) and autos & parts (-1.5% M/M). Orders picked up in metal production (2.2% M/M) and chemicals (0.1% M/M). After a sharp deterioration in business confidence indicators, this outcome provides further evidence that Germany’s growth engine is sputtering as not only export orders, but now also domestic orders are weakening.