German factory orders tumble in February
German factory orders tumbled in February, suffering their worst drop in two years, according to figures released by Destatis on Thursday.
Factory orders fell 4.2% on the month compared to a revised 2.1% decline in January and versus expectations for a 0.3% increase.
Foreign orders fell 6% in February from the previous month, while domestic orders were down 1.6%. New orders from the eurozone were down 2.9% and new orders from other countries slid 7.9% on the month.
On the year, orders slumped 8.4% in February compared to a revised 3.6% drop the month before and expectations for a much smaller decline of 5.4%.
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said the figures were "terrible".
"We aren’t quite sure what drove the consensus to expect a month-to-month increase in this report given the run of horrible survey data in the past few months. That said, the headline is even worse than we expected, driving home the point that German manufacturing is in the middle of a full-blown recession. The headline was pulled down by weakness in both domestic and foreign demand, though the latter was the main driver.
"With official and consensus GDP growth forecasts for 2019 already slashed, to about 1%, and markets well aware weakness in global trade and manufacturing, these data don’t tell investors anything they didn’t already know about the German economy. Even so, the rate of decline is startling. New orders are now sliding at a rate not observed since the financial crisis. We are confident that mean reversion will lift the data in March, but a dark shadow now hangs over the industrial production numbers for Q1. Output jumped in January, but the new orders data warn of grim headlines in tomorrow’s report and, looking ahead, for the March data too."
ING said the data was "devastating" and just undermined any hopes for an industrial rebound.
Chief economist Carsten Brzeski said: "Admittedly, monthly industrial order data are highly volatile but today’s new orders were simply awful. While it looked as if the trend of order book deflation in the German industry had come to a halt at the end of last year, it now looks as if the halt was simply a mere pause before the next landslide.
"Remember that new orders dropped by more than 1% month-on-month on average every single month in the first half of 2018 and then increased by a monthly average of 0.2% between August 2018 and January 2019."
Oxford Economics said: "The weakness in manufacturing orders, alongside the steep declines in sentiment in recent months, confirms that the subdued global trade environment and various uncertainties are taking their toll."