Rebound hopes dim as German factory orders fall

FRANKFURT • German factory orders unexpectedly fell, suggesting Europe's largest economy is still struggling to overcome a manufacturing slump and fend off recession.

Demand dropped 0.4 per cent in October, defying estimates for a 0.4 per cent gain. It was caused by weak demand for investment goods within Germany and outside the euro zone. Bulk orders from within the currency bloc prevented a sharper decline.

The reading serves as a reminder that German factories have a long way to go to overcome a slump that has already lasted more than a year. Industry output continued to contract last month, and business confidence remained muted.

"Manufacturing momentum continues to be depressed," the Economy Ministry said in a statement yesterday. "The outlook for manufacturing in the fourth quarter is still subdued."

Orders in October were down 5.5 per cent from a year earlier, highlighting the damage that global trade conflicts have inflicted on German industry.

A gauge for factories' order stocks last month hinted at continued contraction in the sector, according to a separate report from Germany's Ifo institute. Carmakers as well as chemicals and metal goods producers reported deteriorating conditions.

"The great order book deflation in German industry continues," said chief economist Carsten Brzeski at ING Germany. This "does not bode well for industrial production in coming months. The trade conflict, global uncertainty and sector-specific shocks are clearly weighing on German industry".

The Bundesbank has said Germany's economy will probably stagnate in the fourth quarter, and there is little sign of a rebound anytime soon. Growth is set to remain below 1 per cent next year.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on December 06, 2019, with the headline 'Rebound hopes dim as German factory orders fall'. Print Edition | Subscribe