💎 Fed’s first rate cut since 2020 set to trigger market. Find undervalued gems with Fair ValueSee Undervalued Stocks

German industry orders plunge by largest amount since 2009

Published 06/10/2014, 07:53
© Reuters Various tools are seen hanging from the ceiling at the engine manufacturing unit for the new Mercedes AMG GT super sports cars at the Mercedes AMG headquarters in Affalterbach

By Michelle Martin

BERLIN (Reuters) - German industrial orders tumbled in August by their largest amount since the height of the global financial crisis in 2009, casting a shadow over Europe's largest economy at a time when Berlin faces pressure to loosen the fiscal reins and spend more.

Data from the German economy ministry showed contracts plunged 5.7 percent on the month, far weaker than a Reuters consensus forecast for a 2.5 percent drop.

Bookings from countries outside the euro zone plummeted 9.9 percent, while those from within the single currency bloc fell by 5.7 percent. Domestic orders also dipped by 2.0 percent.

"That clearly bodes ill for the fourth quarter," said Carsten Brzeski, senior economist at ING. "It's not only a Putin fear factor - Germany is also suffering from the weakness of its euro zone peers."

The German economy had a strong start to the year but shrank by 0.2 percent in the second quarter and some economists have warned it could contract again in the third quarter, pushing it into a technical recession.

The bad economic news comes at a time when Germany faces pressure from partners and the European Central Bank to spend more to help boost stalling European growth. German Chancellor Angela Merkel's government has said it has little wiggle room for stimulus given its promise to balance the federal budget next year.

A media report at the weekend said the International Monetary Fund (IMF) will this week cut its estimates for German economic growth in 2014 and 2015 to around 1.5 percent for each year due to the crises in Ukraine and the Middle East.

The Economy Ministry said manufacturers took on fewer bulk orders than average in August and added that orders in July - which were revised up to a rise of 4.9 percent from a previously reported gain of 4.6 percent - had been boosted by the late summer holidays.

But it said that even taking such volatility into consideration, order levels were weak overall due to the subdued euro zone economy and uncertainty caused by crises abroad.

Factories producing capital goods had a particularly rough month, with 8.5 percent fewer orders flowing in than in July, while intermediate goods manufacturers also suffered.

Consumer goods orders, which were up by 3.7 percent thanks to a surge foreign contracts, were the only bright spot.

The weak data comes after a survey last week showed Germany's manufacturing activity shrinking for the first time in 15 months in September as new orders dried up.

© Reuters. Various tools are seen hanging from the ceiling at the engine manufacturing unit for the new Mercedes AMG GT super sports cars at the Mercedes AMG headquarters in Affalterbach

Orders lie 0.3 percent below second-quarter levels, the Economy Ministry said.

(Reporting by Michelle Martin; Editing by Noah Barkin)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.