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German factory orders unexpectedly fall in October

By Michele Maatouk

Date: Thursday 05 Dec 2019

LONDON (ShareCast) - (Sharecast News) - German factory orders unexpectedly fell in October, according to figures released by Destatis on Thursday.
Orders were down 0.4% on the month following a revised 1.5% increase in September and missing expectations for a 0.3% rise.

On the year, factory orders declined 5.5% compared to a revised 5% the month before. However, this was better than the 6.1% drop expected.

Domestic orders fell 3.2% in October, while foreign orders rose 1.5% on the month. New orders from the eurozone were 11.1% higher and new orders from other countries declined 4.1% on the month.

The manufacturers of intermediate goods saw new orders increase by 0.7% compared with September, while the manufacturers of capital goods saw a 1.1% fall and consumer goods saw a 0.3% increase.

Carsten Brzeski, chief economist at ING, said there were still no signs of a turnaround for German industry.

"Hard data cannot yet keep up with the tentative positive signs from soft data. While latest confidence indicators point to a bottoming out, the hard reality looks different.

"The great order book deflation in German industry continues. In fact, it looks as if 2019 will be the second year in a row in which new orders have fallen. In 2018, orders dropped by 0.4% on average. Currently, 2019 is on track to record a monthly average drop of some 0.6%."

Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said this was "not a huge catastrophe given the strong finish to Q3, but we were hoping for much better given the recent tentative signs of stabilisation in the headline surveys".

"Overall, it is still just about possible to tell a story of 'stabilisation' in these data, at least insofar goes that the year-over-year growth rate is not crashing anymore. That said, stabilisation at around -5% isn't exactly anything to write home about, and the main story remains one of very weak demand conditions. Base effects will get much better for the year-over-year rate in Q1, but for now, the outlook for the Q4 hard data is for more weakness."