German factory orders post biggest slump in two years
New factory orders fell 4.2% from the previous month as foreign orders slumped, according to provisional data from Germany’s statistics office released on Thursday. The drop was the biggest fall since January 2017, according to Factset. Analysts polled by Reuters had expected a small month-on-month rise.
Domestic orders decreased by 1.6 per cent and foreign orders fell by 6 per cent on the previous month.
February’s new orders were 8.4 per cent lower than the previous year, illustrating the German economy’s slowdown over the past 12 months. The country narrowly swerved recession in the second half of last year, and grew by 1.5 per cent in 2018, the weakest rate since 2013.
The data offer new insight into the country’s manufacturing slowdown, and confirm closely watched industry surveys which have painted a bleak picture of the country’s factory sector. Flash purchasing managers’ index data spooked global markets in March after showing the manufacturing industry shrunk at the quickest rate in more than six and a half years.
“Devastating new orders data just undermined any hopes for an industrial rebound. Instead, the order book deflation just reached a new standard,” said Carsten Brzeski, chief German economist at ING.
The European Central Bank has slashed its economic forecasts for the eurozone, and expects the currency area to grow at only 1.1 per cent this year. Concerns over the lower outlook led the bank to restart a crisis-era bank lending programme and to commit to keeping rates at record lows until next year at its most recent meeting.