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Mercedes-Benz workers assemble S-Class sedans at the company’s plant in Sindelfingen, Germany.

German Factory Orders Unexpectedly Fall on Exports Slowdown

April 5, 2016
German exporters are struggling with a China-sparked slowdown in emerging markets, and the country’s growth momentum could slow in this second quarter.

German factory orders unexpectedly fell in February in a sign that a global trade slowdown is weighing on Europe’s largest economy.

Adjusted for seasonal swings and inflation, orders dropped 1.2% from the prior month, when they rose a revised 0.5%, data from the Economy Ministry in Berlin showed on Tuesday. The reading, which is typically volatile, compares with a median estimate for an increase of 0.3% in a Bloomberg survey. Orders climbed 0.5% from a year earlier.

While Germany corporate confidence improved last month because of robust domestic demand, exporters are struggling with a China-led slowdown in emerging markets. Bundesbank warned last month that the nation’s growth momentum could slow in the second quarter as weakening exports prompt companies to curb output and hiring.

“Against the background of potential new uncertainties, the outlook for the German industry remains anything but rosy,” said Carsten Brzeski, chief economist at ING Diba AG in Frankfurt. “Today’s new orders were another piece of evidence that the German industry is treading water, as it is suffering from a cooling of global activity.”

The ministry’s report showed that export orders fell 2.7% in February, led by a 3.7% slump in orders from the rest of the euro area. Orders for investment goods declined 2.1% and those for consumer goods dropped 7.3%. Domestic orders gained 0.9%.

“Orders in the manufacturing sector developed slowly at the beginning of the year,” the ministry said in a press release. “This reflects the sluggish development of the global economy.”

By Piotr Skolimowski

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