Subdued start to year for German manufacturing

German industrial orders unexpectedly dropped in February, partly because companies got fewer major contracts, after bookings already plunged in January, suggesting manufacturers had a subdued start to 2015 in Europe’s largest economy.

Orders for goods made in Germany — a highly volatile indicator — decreased by 0.9% on the month, data from the Economy Ministry showed. A Reuters poll had forecast a 1.5% rise.

It was the first time since last summer that orders have slipped for two months running.

“The drop in new orders shows that after a series of almost euphoric news and indicators from Germany and eurozone, some caution is clearly justified,” said Carsten Brzeski, senior economist at ING.

But he said the weak euro should help German industrial firms: “Judging from earlier episodes with similar exchange rate weakness, order books are currently only moderately filled. If past performances are any guide for the future, German exporters can start rubbing their hands.”

The decline in new contracts was driven by a drop in demand for capital and intermediate goods. Bookings for consumer goods, which rose by 2.9% on strong demand from abroad, were the only bright spot.

Reuters