German factory orders slide


FRANKFURT • German factory orders unexpectedly dropped in March and February was revised lower, confirming a weak start to the year in Europe’s largest economy and raising concern over the strength of the euro-area growth.

Orders slid 0.9%, compared to a median estimate for a 0.5% increase in a Bloomberg survey.

With February’s figure revised to -0.2% from a gain of 0.3%, orders have now dropped for three straight months for the first time since 2015.

The continued slump, despite record-low unemployment and signs that wage growth is picking up, meshes with a pattern of weak data across the euro-area that has prompted the European Central Bank to hold off from discussions on ending its stimulus measures. While the German figures may signal that factories are running into capacity constraints that will take time to overcome, they might also reflect a fundamental slowdown in demand.

The growth in orders in the first quarter (1Q) was “gentler” after a dynamic expansion in the second half of 2017, but “companies’ orderbooks are still very well-filled”, the Economy Ministry said in a statement.

“Part of the weakness in March was driven by big-ticket orders” said Oliver Rakau, chief German economist at Oxford Economics in Frankfurt. “But if you look at core orders they look better, especially the strength of domestic orders which may be an initial sign of a bounce-back in the 2Q.”

Export orders slid 2.6%, with a 3% decline from the eurozone and 2.5% drop outside the currency bloc. Domestic orders climbed 1.5%. Total orders rose 3.1% from a year earlier.

Orders for investment goods decreased 1.8%, though those for consumer goods rose 2.2%.