FRANKFURT AM MAIN: Industrial orders in Europe’s largest economy Germany plunged 7.4 percent in January, preliminary official data showed Tuesday, countering a sharp upswing in the previous month.
New orders — a closely watched indicator of future economic performance — had increased 5.2 percent in December, adjusting for price, seasonal and calendar effects, federal statistics office Destatis confirmed.
Analysts surveyed by Factset had predicted a much smaller fall in January of 2.5 percent.
Domestic demand for German industrial firms’ products fell much more sharply than foreign orders, at 10.5 percent compared with 4.9 percent, with orders from the eurozone contracting faster than those from countries outside the single currency area.
The biggest fall came for capital goods makers, who saw 9.9 percent fewer orders, while producer goods firms lost 4.0 percent and consumer goods 2.0 percent.
January’s data showed a smaller fall of 2.9 percent in orders when large contracts — a volatile item that can see large swings from month to month — were stripped out, Destatis said.
“Industrial orders were extremely influenced by large contracts in the last two months reported (December and January),” the federal economy ministry in Berlin commented in a statement.
“Even ruling out large contracts, the strong increase in orders in the final quarter of 2016 makes a weak start to the new year manageable,” the civil servants went on.
Comparing December plus January to October plus November showed a fall of just 0.4 percent in orders, the economy ministry pointed out.
Berlin also highlighted strong confidence surveys among industrial firms, suggesting a pick-up in business in the coming months.
“Today’s disappointing data is a good reminder that German industry is having more problems returning to full speed than buoyant sentiment indicators have been suggesting,” countered economist Carsten Brzeski of ING Diba bank.
January’s drop in new orders was the largest since 2009, he noted, following on from months of “almost unprecedented” fluctuations in the indicator since last summer.
Heightened uncertainty has weighed on business since June 2016, when Britain voted to quit the EU, and been sustained by Donald Trump capturing the White House on a protectionist platform, as well as upcoming elections in the Netherlands, France, and Germany in which anti-globalisation parties stand to make strides.