German Factory Orders Log Unexpected Decline

Germany's factory orders declined unexpectedly in April on weak domestic demand, figures from Destatis revealed Thursday.

Factory orders slid 2.5 percent month-on-month in April, bigger than the revised 1.1 percent decrease seen in March and confounded expectations for an increase of 0.8 percent. This was the fourth consecutive decline in orders.

The decline was largely caused by a 4.8 percent drop in domestic orders. At the same time, foreign orders decreased only 0.8 percent due to a 9.9 percent fall in demand from the euro area. New orders from other countries grew 5.4 percent.

Excluding major orders, new orders dropped 1.7 percent month-on-month in April.

The slower development in incoming orders seen over the first quarter continued in April, the economy ministry said. "To what extent uncertainties play a role, especially from the external environment, is difficult to assess," the ministry added.

On a yearly basis, factory orders fell marginally by 0.1 percent in April, in contrast to March's 2.9 percent expansion. Economists had forecast a 3.6 percent rise.

Data showed that manufacturing turnover increased by an adjusted 0.3 percent month-on-month, but slower than the 0.6 percent increase seen in March.

Another report from Destatis showed that wholesale turnover rose by a real 0.8 percent from the previous year in the first quarter. In March, turnover in wholesale trade fell 2.1 percent on month and declined 4.3 percent annually.

Destatis is scheduled to issue industrial production data on June 8. Economists forecast output to grow 0.3 percent on month in April, following March's 1 percent increase.

Industrial production should generally decline in the coming months, even though sales figures, suggest a slight increase in industrial production in April, Ralph Solveen, an analyst at Commerzbank, said.

The German economy should therefore post only moderate growth again in the second quarter, the analyst added.

Eurozone GDP growth eased to 0.4 percent in the first quarter from 0.7 percent seen a quarter ago. Germany's growth halved to 0.3 percent from 0.6 percent.

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