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Germany Factory Orders Fall On Domestic Demand

germanyindustrialproduction oct08 05dec19 lt

Germany's manufacturing new orders declined unexpectedly in October on weak domestic demand, provisional data from the Federal Statistical Office showed on Thursday.

Factory orders fell a seasonally and calendar adjusted 0.4 percent month-on-month following a 1.5 percent increase in September, which was revised from the initially reported 1.3 percent gain. Economists had expected a 0.4 percent gain.

Domestic orders dropped 3.2 percent, while foreign demand grew 1.5 percent. Orders from the euro area surged 11.1 percent, while those from other countries fell 4.1 percent.

Intermediate goods manufacturers logged a 0.7 percent increase in orders, while producers of capital goods reported a 1.1 percent decline. Orders for consumer goods grew 0.3 percent.

Excluding major bookings, manufacturing orders decreased a seasonally and calendar adjusted 1.4 percent from the previous month.

On a year-on-year basis, factory orders dropped 5.5 percent in October after a 5 percent slump in the previous month. Economists were looking for a 4.7 percent decline.

Data showed that turnover in manufacturing edged up 0.1 percent, in contrast to a decrease of 1.2 percent in September.

The economy ministry said the manufacturing sector is still weak and the manufacturing outlook for the fourth quarter remains subdued.

The great order book deflation in German industry continues, Carsten Brzeski, an ING economist noted. The year 2019 is on track to record a monthly average drop of some 0.6 percent, he added.

Christoph Weil, an economist at Commerzbank, said manufacturing is likely to slow down the German economy in the coming months, so that real GDP will probably only stagnate in the fourth quarter.

Driven by spending and construction investment, the largest euro area economy had skirted recession in the third quarter. The economy had expanded 0.1 percent.

Results of the Purchasing Managers' survey showed on Thursday that the construction sector expanded at the fastest pace in seven months in November. The IHS Markit construction Purchasing Managers' Index rose to 52.5 in November from 51.5 in October.

The overall expansion was driven by an upturn in housing activity. The drag on overall activity from civil engineering eased, while commercial was the worst-performing construction sub-sector.

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