German November Factory Orders Fall More Than Forecast

German Factory Orders 010815

German factory orders declined more-than-expected in November on a sharp contraction in domestic demand signaling weak economic activity in the largest euro area economy.

Factory orders declined 2.4 percent month-on-month, reversing a revised 2.9 percent rise in October, Destatis said Thursday. Orders were expected to fall by 0.8 percent. This was the first drop in demand in three months.

Domestic orders decreased sharply by 4.7 percent in November, while foreign bookings slid only 0.7 percent.

The direction of trade in foreign transactions showed that new orders from the euro area advanced 2.7 percent, while new orders from other countries declined 2.6 percent.

Manufacturers of intermediate goods recorded decreases in orders by 2.3 percent and demand for capital goods fell 3.1 percent. On the other hand, orders for consumer goods advanced 2.6 percent.

On a yearly basis, factory orders fell 0.4 percent in November, confounding expectations for an increase of 1 percent and October's 2.6 percent expansion.

Nonetheless, the Economy Ministry said the prospects for a rise in new orders in the fourth quarter are good overall. The improvement in sentiment indicators at the end of the year underscores this assessment, it said.

According to Purchasing Managers' survey, German manufacturers said new orders returned to growth in December, ending a three month period of contraction. The business activity index rose to 51.2 from November's 17-month low of 49.5.

Eurozone inflation turned negative in December for the first time since 2009. In Germany, inflation slowed to 0.1 percent in December, which was the weakest since October 2009.

The data added scope for additional quantitative easing from the European Central Bank at its meeting late January.

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