FRANKFURT: German factory orders unexpectedly dropped for a fourth month in April, raising the prospect that an economic slowdown at the start of the year may be worsening.
Orders, adjusted for seasonal swings and inflation, slid 2.5%, the Economy Ministry said, compared with forecasts for an increase of 0.8%. From a year earlier, orders slipped 0.1%, the first annual decline since 2016. The continued weakness even in the euro area’s largest economy will cast a shadow over the European Central Bank’s policy meeting next week, when officials plan to discuss the future of their stimulus programme.
ECB chief economist Peter Praet signalled on Wednesday that the first formal talks on when to halt bond buying are imminent.
The German data showed that orders from the eurozone fell almost 10%, with capital goods plunging 16%.
“To what extent uncertainties play a role, especially from the external environment, is difficult to assess,” the Economy Ministry said in a statement. “However, the order backlog in the manufacturing sector is still very high.”
The euro pared gains after the report and was trading 0.2% higher at US$1.1797 at 8.04 am Frankfurt time.
After the strongest economic expansion in a decade last year, the currency bloc has taken a blow to confidence amid an escalating trade war with the US and recent political turmoil in Italy that spooked bond markets.
IHS Markit’s gauge of private-sector activity declined in May, and a measure of investor confidence by Sentix slumped to the weakest since 2012.
The euro area’s statistics office will publish a breakdown of first-quarter gross domestic product at 11 am in Luxembourg. — Bloomberg