BERLIN (Reuters) – German industrial orders dropped unexpectedly in September due mainly to weaker foreign demand, in a sign that Europe’s biggest economy may lose steam at the end of this year.
Contracts for ‘Made in Germany’ goods were down by 1.7 per cent on the month, the economy ministry said on Thursday. It is the first time since the summer of 2011 that orders have dropped for three consecutive months and compares with a Reuters consensus forecast for a rise of 1.0 per cent.
German factories received 2.4 per cent fewer bookings from abroad, driven by a 6.7 per cent slide in demand from euro zone countries, while domestic orders fell by 0.6 per cent. Bookings from outside the currency bloc inched up 0.7 per cent.
ING Bank economist Carsten Brzeski said the data signalled that a dip over the summer might have been more than a vacation-driven breather.
“The fact that new orders have dropped for three consecutive months suggests that our positive take on the German industry got some scratches,” he said, adding that the emissions scandal engulfing carmaker Volkswagen had not yet shown up in the data.
The only bright spot was slightly higher demand from non-euro zone countries, suggesting that the slowdown in China was having only a limited impact on German industry, he added.
In the less volatile three-month comparison, factory orders fell 2.8 per cent on the quarter in the July-September period, with domestic demand inching up 0.3 per cent, bookings from euro zone countries rising 0.9 per cent and orders from countries outside the currency bloc plunging 8.6 per cent.
“Overall, industrial orders are currently in a weak phase, mainly due to slow demand from non-euro zone states,” the ministry said. It added, however, that business morale remained good with demand from domestic and euro zone customers still pointing upwards.
The data comes after the BGA wholesalers and exporters body last week raised its forecast for export growth for 2015, saying demand from Europe and the United States would offset weaker emerging markets and any negative impact from the VW scandal.
Fitting into this picture, premium carmaker BMW on Tuesday reported a surprise rise in third-quarter operating income as strong sales in higher-margin core European markets outweighed weak demand in China.
The German government expects strong private consumption and higher state spending on refugees to drive growth in Europe’s largest economy by 1.7 per cent this year and by 1.8 per cent next.