German Manufacturing Orders Weaken After Investment-driven Surge

German factory orders fell in November, partially offsetting an investment-driven surge the previous month.

Orders, adjusted for seasonal swings and inflation, dropped 2.5% from October, when they jumped a revised 5%, data from the Economy Ministry in Berlin showed on Friday. That compares with a median estimate of a 2.4% decline in a Bloomberg survey. Orders gained 3% from a year earlier.

Retail sales fell 1.8% in November from the previous month, the Federal Statistics Office in Wiesbaden said in a separate release. Sales were up 3.2% on the year.

The reports follow a slew of data suggesting Germany’s economy strengthened at the end of 2016, with output expanding by the most in a year, unemployment continuing to decline, and the inflation rate posting a record increase to 1.7% after a surge in the cost of oil. Still, the country faces an uncertain year as it approaches national elections in autumn, while its third-largest trading partner, the U.K., negotiates the terms of its exit from the European Union.

“Despite the decline in November, the results point to a very favorable development of orders in the final quarter of the year,” the Economy Ministry said in an e-mailed statement. “The significant increase in overall demand signals a revival of manufacturing in the winter half.”

Orders in the two months through November were up 3.5% from the August-September period, the ministry said. The drop in the penultimate month of last year was amplified by weak demand for big-ticket items, it added. Investment-goods orders declined 4.8% from October, while demand for basic and consumer goods increased.

The Economy Ministry will publish industrial production data for November on Monday.

By Carolynn Look