German orders fall sharply in September

German orders fall sharply in September

In September, German factory orders dropped for a second straight month, but at a significantly stronger rate than forecast. On a monthly basis, German factory orders fell by 3.3% M/M, the biggest monthly decline since December 2010. The August figure was however slightly upwardly revised, from -1.3% M/M to -0.8% M/M. Looking at the details, weakness was based in both domestic (-1.8% M/M) and foreign (-4.5% M/M) orders. Within the foreign orders, factory orders from other euro zone countries plunged by 9.6% M/M, while non-euro zone factory orders dropped by 1.5% M/M. The breakdown by major group shows that the decline in orders was broad based and led by intermediate goods (-5.0% M/M), but orders for capital (-2.4% M/M) and consumer (-1.7% M/M) goods suffered too. These very poor order data suggest that also Germany is now feeling the pain from the euro zone crisis. Until recently, German production held up rather well, but the outlook for the fourth quarter looks poor with confidence indicators suggesting that activity will slow further and now also orders falling sharply.