Decline In German Factory Orders Exceeds Forecast

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Germany's factory orders declined more than expected in August on weak domestic orders, suggesting that the economy gained only limited support from private consumption.

Orders fell 1.3 percent from a month ago, when it rose 0.3 percent, the Federal Ministry of Economics and Technology reported Friday. Bookings were forecast to decline by 0.5 percent.

The safety net gets thinner and thinner, said ING Bank NV's economist Carsten Brzeski, who expects the downswing of the German industry to continue.

Domestic orders slipped 3 percent on a monthly basis, reversing last month's 0.8 percent growth. Meanwhile, foreign orders remained flat in both July and August.

Demand from Eurozone increased 2.4 percent despite crisis dampening economic activity. On the other hand, orders from non-EU nations were down 1.4 percent.

Orders for intermediate goods grew at a faster pace of 1.3 percent after rising 0.5 percent in the prior month. By contrast, capital goods orders slipped 3 percent, following a 0.2 percent rise. Consumer goods orders were down 0.7 percent.

Working-day adjusted factory orders decreased 4.8 percent annually, following a 4.6 percent drop in July. The decline exceeded a 4.3 percent drop forecast by economists. Similarly, factory orders on unadjusted basis dropped 4.8 percent.

The German private sector activity remained in the negative territory in September, according to the latest Purchasing Managers' survey. The German economy expanded only 0.3 percent in the June quarter.

Official data showed that retail sales grew 0.3 percent in August following a modest decline in the previous month.

Unemployment in Germany increased for the sixth consecutive month in September as companies struggled with weak orders amid fears of looming recession in the euro area.

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