German Factory Orders Dropped in November on Weak ExportsGabi Thesing
German factory orders fell more than economists expected in November amid weak demand from outside the euro area.
Orders, adjusted for seasonal swings and inflation, dropped 1.8 percent from October, when they jumped a revised 3.8 percent, the Economy Ministry in Berlin said today. Economists had predicted a 1.4 decline, according to the median of 24 forecast in a Bloomberg News survey. From a year earlier, orders fell 1 percent when adjusted for work days.
“The drop was to be expected after last month’s increase,” said Carsten Brzeski, an economist at ING Group in Brussels. “While there will be an economic dip in the fourth quarter and the recovery will be very gradual, the outlook for Germany is not bad at all. The lull in the crisis means companies are confident to invest again.”
Germany’s economy has shown some signs of stabilization in recent weeks, even as the euro economy, Germany’s biggest trading partner, fights recession. Unemployment increased less than economists expected in December, while business confidence improved for a second month. Investors also were more optimistic.
At the same time, exports plunged 3.4 percent in November, marking the steepest decline in more than a year, the Federal Statistics Office in Wiesbaden said earlier today.
Export sales fell 4.1 percent in November, driven by a 6.5 percent decline in demand from outside the 17-nation currency bloc, today’s report shows. Orders from the euro area rose 0.2 percent and domestic orders gained 1.3 percent.
Orders for intermediate goods rose 0.2 percent, while investment-goods orders decreased 3.1 percent and consumer goods orders were down 1.6 percent. The number of bulk orders was below average, the ministry said.
A decline in orders after a surge in the previous month is “not unusual” and “overall, demand seems to be stabilizing,” the ministry said, citing a November order volume that matches levels reached in the third quarter.
The German economy will probably stagnate in the first quarter after a marked contraction in the fourth, the Bundesbank predicted on Dec. 17. It forecasts growth of 0.4 percent in 2013.
Economic weakness at the end of last year was “temporary” and measures taken to resolve the debt crisis are showing a “positive effect,” Germany’s Economy Minister Philipp Roesler said yesterday. Europe’s largest economy grew 0.75 percent in 2012, he added.
Germany’s Federal Statistics Office will publish full-year gross-domestic-product data on Jan. 15.
Schaeffler AG, the roller-bearing maker that is the biggest investor in car-parts manufacturer Continental AG, last month lowered its 2012 sales forecast because of weaker demand in Europe and Asia.
With the second euro-area recession in four years curbing investment, some companies are focusing on sales to faster growing regions. Germany’s chemical association VCI, which represents 1,650 chemical companies including BASF SE and Lanxess AG, on Dec. 12 forecast an increase in chemical and pharmaceutical production of 1.5 percent for this year, boosted by demand from emerging markets.
“The worst may be over” in terms of the “deteriorating export performance and the outlook for the wider German economy,” said Chris Williamson, chief economist at Markit Economics in London. “But weak euro-zone demand is likely to impede the pace of recovery.”