German factory orders down amid concerns
BERLIN - Reuters
German industrial orders plunged due to weak demand from domestic and euro zone clients in April, posting their fourth straight drop on the month, as growing uncertainty about a global trade war led companies to scale back investment plans.
The weaker-than-expected data, published by the Federal Statistics Office yesterday, suggested that the upswing in Europe’s largest economy could further lose momentum after its quarterly growth rate halved at the beginning of the year.
Contracts for goods ‘Made in Germany’ fell by 2.5 percent on the month in April after a downwardly revised drop of 1.1 percent the previous month, the data showed.
The reading significantly undershot a Reuters poll of analysts, who had predicted a 0.8 percent rise. It was the first time since the financial crisis in 2008 that German industrial orders fell four months in a row.
VP Bank economist Thomas Gitzel pointed to rising uncertainty sparked by U.S. President Donald Trump’s decision in March to impose hefty tariffs on steel and aluminum imports.
“This has probably unsettled companies in the euro zone and with it slowed demand for capital goods,” Gitzel added.
Overall, orders from domestic clients were down 4.8 percent while foreign demand edged down 0.8 percent, the data showed.
DIHK economist Sophia Krietenbrink said the unexpected drop in orders could signal a loss of economic momentum despite the fact that order backlogs were still high.
“Trade conflicts, in particular, are causing considerable uncertainty from outside,” she said.
The release followed a string of strong economic data that included retail sales posting a bigger-than-expected jump in April and unemployment reaching a record low in May.