- Orders fall 1.2% on month vs. estimate of 0.3% increase
- February decline led by sluggish growth in global trade
German factory orders unexpectedly fell in February in a sign that a global trade slowdown is weighing on Europe’s largest economy.
Orders, adjusted for seasonal swings and inflation, dropped 1.2 percent from the prior month, when they rose a revised 0.5 percent, data from the Economy Ministry in Berlin showed on Tuesday. The reading, which is typically volatile, compares with a median estimate for an increase of 0.3 percent in a Bloomberg survey. Orders climbed 0.5 percent from a year earlier.
While Germany corporate confidence improved last month because of robust domestic demand, exporters are struggling with a China-led slowdown in emerging markets. Bundesbank warned last month that the nation’s growth momentum could slow in the second quarter as weakening exports prompt companies to curb output and hiring.
“Against the background of potential new uncertainties, the outlook for the German industry remains anything but rosy,” said Carsten Brzeski, chief economist at ING Diba AG in Frankfurt. “Today’s new orders were another piece of evidence that the German industry is treading water, as it is suffering from a cooling of global activity.”
The ministry’s report showed that export orders fell 2.7 percent in February, led by a 3.7 percent slump in orders from the rest of the euro area. Orders for investment goods declined 2.1 percent and those for consumer goods dropped 7.3 percent. Domestic orders gained 0.9 percent.
“Orders in the manufacturing sector developed slowly at the beginning of the year,” the ministry said in a press release. “This reflects the sluggish development of the global economy.”