Photographer: Krisztian Bocsi/Bloomberg

German Factory Orders Declined in April on Weak Export Demand

  • Orders fell 2% on month compared with estimated 0.5% drop
  • Domestic demand increased for third consecutive month

German factory orders declined in April as demand for investment goods from outside the 19-nation currency region slumped.

Orders, adjusted for seasonal swings and inflation, fell 2 percent from the prior month, when they rose a revised 2.6 percent, data from the Economy Ministry in Berlin showed on Monday. The reading, which is typically volatile, compares with economists’ forecast for a drop of 0.5 percent. Orders slid 0.5 percent from a year earlier.

The Bundesbank last week cut its forecast for German growth in 2016 and 2017, while affirming a robust underlying economic trend as a strengthening labor market and rising household incomes underpin domestic spending. Business sentiment was the strongest in five months in May as data confirmed the economy expanded 0.7 percent in the first quarter.

A drop in orders “is more of a counter-movement to rather strong figures from March, which were pumped up by an unusual high number of big-ticket items,” Ralph Solveen, an economist at Commerzbank AG in Frankfurt, said before the report. “If you look for a slightly longer period, the underlying trend in orders is more or less unchanged.”

Export orders fell 4.3 percent, led by a 13.3 percent slump in investment-goods demand from the outside the euro area that followed an 11 percent surge the previous month, the ministry report showed. Euro-zone orders gained 2.5 percent and domestic orders rose 1.3 percent, marking the third consecutive monthly increase.

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