industry

Germany DISAPPOINTS: Weaker-than-expected factory orders fail to lift economy fears


Industrial orders in the largest economy in Europe were up in March following two months of steep declines, but the rise was weaker than analysts were expecting, data showed today. The Federal Statistics Office revealed contracts for ‘Made in Germany’ goods were up 0.6 percent, undershooting a forecast of 1.5 percent. The reading for February was revised slightly up to a fall of 4.0 percent from a previously reported drop of 4.2 percent. Germany has seen its economy dented in recent months by a weakening manufacturing sector, sparking concerns of a long-term shift down in gear for the European economic powerhouse.

Berlin has been caught up in the repercussions of the United States-China trade war, with Beijing being the top trading partner for Berlin outside the European Union.

Slowing global demand and car manufacturing taking a tumble from stricter emission standards has also weighed on the economy.

Uncertainty from Brexit has also played a role in an overall weakness across the eurozone.

Last month new figures showed business sentiment unexpectedly tumbled in Germany, as the Munich-based Ifo economic institute said its business climate index fell to 99.2 in April.

The reading was down from expectations of a rise to 99.9.

Meanwhile, a report last week showed the number of German goods exported to the UK “collapsed” after Brexit.

In 2018, German exports to Britain fell by 11.4 percent to 16.5 million tons upon the previous year.

Foreign trade which is considered to be a leading economic indicator also saw imports drop by 15.4 percent to 14.7 million tons.

The data was provided by the Institute for Applied Logistics (IAL) at the University of Würzburg-Schweinfurt along with logistics specialist AEB, who publishes regular analysis of trade flows between Germany and the rest of the world.

Germany fared slightly better earlier this week, as the Service PMI index rose to 55.7 from 55.4 in March, its highest reading since September.

The increase was led by strong growth in the post and telecoms sector.

Service providers were hiring at their fastest rate since October 2007, with numbers nearing their highest since data was first collected 22 years ago, with rising wages feeding through into both input cost and sales price inflation.

Markit’s Principal Economist Phil Smith said: “At 55.7, the headline business activity index has edged further above its long-run trend level and isn’t too far off the highs in 2018.”

Only the transport and storage services sectors showed a decrease in activity, reflecting the manufacturing weakness that is dragging on Markit’s Germany Composite Output index.

Coming in at 52.2, that reading was one of the lowest seen in six years.

Though it was nonetheless up on the previous month’s 51.4, thanks to the strong services performance.



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