• Orders declined 0.4% on month vs. estimated 0.5% gain
  • Drop driven by slump in euro-area demand for investment goods

German factory orders unexpectedly declined in June as demand for investment goods from within the euro area slumped in the run-up to Britain’s referendum on European Union membership.

Orders, adjusted for seasonal swings and inflation, fell 0.4 percent from May, when they rose a revised 0.1 percent, data from the Economy Ministry in Berlin showed on Friday. That’s the third consecutive month demand remained below economists’ estimates. The median in a Bloomberg survey was for an increase of 0.5 percent. Orders dropped 3.1 percent from a year earlier.

The Bundesbank has reassured investors that Germany’s economy merely took a breather in the second quarter and Britons’ vote to quit the EU hasn’t fundamentally changed the outlook for a growth pick-up in the current period. Company executives are less optimistic, with Siemens chief Joe Kaeser warning on Thursday that political uncertainty in countries like the U.K. threatens to damp orders and investment.

“Manufacturing orders showed little dynamic in the first half of the year,” the Economy Ministry said in an e-mailed statement. “Business confidence reacted very moderately to the Brexit vote in the U.K. and remains slightly expansionary.”

Euro-area orders fell 8.5 percent in June from the previous month, with demand for investment-goods down 13.6 percent, the data showed. Domestic demand increased 0.7 percent and orders from outside the euro area gained 3.8 percent.

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