German Factory Orders Drop as Global Slowdown Weighs on Economy

German factory orders fell for a second month in January in a sign that a global slowdown and weak domestic pricing power may be hurting Europe’s largest economy.

Orders, adjusted for seasonal swings and inflation, dropped 0.1 percent from the prior month, when they slid 0.2 percent, data from the Economy Ministry in Berlin showed on Monday. The reading, which is typically volatile, compares with a median estimate for a decrease of 0.3 percent in a Bloomberg survey. Orders climbed 1.1 percent from a year earlier.

While Germany is benefiting from record-low unemployment that’s boosting domestic demand, corporate confidence has been hit by market volatility and concerns that the euro area’s recovery might fade. Exporters are struggling with a China-led slowdown in emerging markets.

Even so, the ministry’s report showed that export orders gained 1 percent in January, led by a 7.5 percent jump in orders from the rest of the euro area. Orders for investment goods rose 1.7 percent and those for consumer goods advanced 3.9 percent. Domestic orders dropped 1.6 percent and those for basics goods slumped 4 percent.

Germany’s inflation rate dropped to minus 0.2 percent last month, the weakest figure in more than a year. Euro-area inflation was also minus 0.2 percent. The European Central Bank is predicted by economists and investors to add fresh stimulus for the region when policy makers meet in Frankfurt on Thursday.

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