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German industrial orders disappoint again in April
FRANKFURT AM MAIN, June 7, 2018 (BSS/AFP) – Industrial orders fell for
German firms for the fourth month in a row in April, official data showed
Thursday, confounding analysts’ hopes for a recovery.
New contracts dropped 2.5 percent month-on-month, adjusting for price,
seasonal and calendar effects, federal statistics authority Destatis said.
The result disappointed analysts’ forecasts of a 0.7 percent increase
compared with May.
Orders from Germany’s neighbours in the eurozone fell the most sharply,
losing 9.9 percent, while new domestic contracts also fell 4.8 percent.
One bright spot was orders from further afield, with demand from the rest
of the world increasing 5.4 percent.
Industrial orders are an indicator of future economic activity, closely
watched by observers of Europe’s largest economy.
After German growth halved between January and March compared with the
previous three months, to 0.3 percent, analysts argued the slowdown was
likely a blip that would be corrected in future quarters.
But “it will get harder and harder to explain these monthly drops with
one-offs like the weather or the timing of vacation,” ING Diba bank analyst
Carsten Brzeski commented.
“Evidence is piling up that the soft patch at the start of the year has
been more serious than previously thought.”
Surveys of confidence among investors and business leaders have also
fallen from the euphoric levels seen late last year.
Financial players and firms are plagued by uncertainty on several fronts,
including the threat of US President Donald Trump’s tariffs on metals imports
from close allies like the European Union escalating into a full-blown trade
war.
Other fears hanging over the European economy range from financial markets
punishing Italy’s newly-installed populist government for its big-spending
plans, potentially pitching the eurozone into a renewed crisis, to stalled
progress in negotiations over Britain’s March 2019 departure from the EU.
“It’s hard to judge to what extent uncertainty in the foreign trade
environment played a role” in the slide in orders, the economy ministry in
Berlin said in a statement.
The government economists noted that discounting orders for large vehicles
like aircraft, trains and ships showed a much smaller fall in contracts of
just 0.6 percent in April.
Firms’ order books remain well-filled despite the repeated slips in new
contracts, they added.
BSS/AFP/HR/1235