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Thursday, Mar 7, 2013 1:00 PM UTC

German industrial orders drop unexpectedly

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Topics: From the Wires,

BERLIN (AP) — A fall in demand for German exports, particularly from other countries in the eurozone, caused an unexpected decline in industrial orders in Europe’s biggest economy in January — a disappointment after a string of optimistic signals.

Orders were down 1.9 percent compared with the previous month, the Economy Ministry said Thursday. Economists had expected an increase of 0.6 percent, following a gain of 1.1 percent in December. The December figure was revised up from the initial reading of 0.8 percent.

The Economy Ministry said the number of large orders was well below average in January. The decline was led by a 4.1 percent drop in demand from the other 16 European Union countries that use the euro, several of which are in recession, reversing a gain the previous month. Orders from other foreign countries dropped 2.3 percent.

Overall, orders from abroad were down 3 percent while demand from inside Germany slipped by 0.6 percent.

The figures were a disappointment after other recent indicators pointed to an upturn in the economy — widely expected to return to growth in the current quarter after shrinking by 0.6 percent in the October-December period. That would keep Germany out of recession, commonly defined as two consecutive quarters of shrinking output.

A closely watched survey of business confidence has risen for four consecutive months and consumer confidence also is edging higher.

Carsten Brzeski, an economist at ING in Brussels, noted that Germany’s labor market is solid and retail sales increased in January, but “the strengthening of industrial activity remains a very gradual and choppy one.” All the same, a steady increase in new orders until December still points to a pickup in industrial production, he added.

Economist Andreas Rees at UniCredit in Munich said that a turnaround in hard economic data has been “postponed but not canceled.”

“A strong recovery in the German industrial sector is still in the making and will materialize any time soon,” he argued, pointing to the steady increase in business confidence and the effect on January’s figures of a lack of big-ticket orders. “Just a bit more patience is warranted.”

More By Geir Moulson.

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