The German Economy Ministry said that factory orders in Europe’s largest economy surged in June, giving hope that the country is on track for a recovery following the severe declines suffered from the coronavirus lockdown earlier in the year.

Orders advanced by 27.9 per cent on a monthly basis, faster than the 10.4 per cent increase seen in May. Economists had forecast a 10.1 per cent rise for June.

Germany’s economy took a massive hit during the coronavirus shutdowns, contracting by 10.1 per cent during the April-June period from the previous quarter as exports and business investment collapsed. Yet, even with the surge in June, industrial orders are still down by more than 11 per cent on the year.

Meanwhile, the Bank of England’s interest rate setting Monetary Policy Committee left interest rates unchanged at 0.1 per cent on Thursday and maintained its current stock of quantitative easing at £745 billion. The move comes as the bank issued a warning saying it expects UK unemployment to jump to 7.5 per cent by the end of the year. Its nine-strong Monetary Policy Committee voted unanimously to hold rates.

It also added a caveat on negative rates saying “the MPC will continue to review the appropriateness of a negative policy rate as a policy tool alongside its broader toolkit.” The central bank also commented that UK banks hold enough capital to keep on lending and absorb the losses that are likely to arise due to the COVID-19 pandemic.

Finally, growth in China’s services sector slowed in July from a decade-high the previous month, as new export business fell and job losses continued, an industry survey showed on Wednesday. The Caixin/Markit services Purchasing Managers’ Index (PMI) fell to 54.1 from June’s 58.4, which was the highest reading since April 2010. PMI readings above 50 indicate expansion, while those below that signal contraction. The services sector, which accounts for about 60 per cent of the economy, had been slower to recover than large manufacturers, but the recovery has gathered pace in recent months as the nationwide restrictions on public gatherings were gradually lifted.

However, pressures remain. Heavy job losses, pay cuts and fresh localised COVID-19 outbreaks have made some consumers cautious about spending and going out again.

This report was compiled by Bank of Valletta for general information purposes only.