Steep Drop in German Industrial Orders Points to Eurozone Slowdown

Nov. 5, 2010
Biggest single decline was 20.4%, in eurozone orders for investment goods, those used to make final products

The economy ministry said orders in the biggest European economy plummeted by 4% in September from the previous month, the sharpest fall since January 2009, with orders from eurozone partners more than 13% lower.

The overall fall was fare bigger than a forecast decline of 0.4% compiled by Dow Jones Newswires and erased a revised gain of 3.5% in August.

A breakdown of the numbers showed the biggest single decline, of 20.4%, in eurozone orders for investment goods, those used to make final products.

"Contrary to the previous month, only a modest number of large orders were recorded in September," a ministry statement said.

One bright spot was nonetheless seen in the two-month sliding average which is calculated to even out volatile one-off developments, and which edged up by 0.6% in August and September from June-July.

"The growth dynamic in industrial orders has weakened considerably as expected, following the boom in the first half," the ministry said. It noted however that "the trend is still oriented upwards."

Germany has forecast overall growth of 3.4% in 2010 owing in large part to strong gains in the first six months of the year.

On Nov. 5, the eurozone purchasing managers index (PMI) compiled by London-based data and research group Markit slumped to an eight-month low of 53.3 points, another sign that economic growth was set to weaken.

Although manufacturing output expanded further, it was offset by weaker growth at service providers, Markit said.

Copyright Agence France-Presse, 2010

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