German industrial orders disappoint again in April

Industrial orders fell for German firms for the fourth month in a row in April, official data showed yesterday, confounding analysts’ hopes for a recovery.

New contracts dropped 2.5 percent month-on-month, adjusting for price, seasonal and calendar effects, federal statistics authority Destatis said.

The result disappointed analysts’ forecasts of a 0.7 percent increase compared with May.

Orders from Germany’s neighbours in the eurozone fell the most sharply, losing 9.9 percent, while new domestic contracts also fell 4.8 percent.

One bright spot was orders from further afield, with demand from the rest of the world increasing 5.4 percent.

Industrial orders are an indicator of future economic activity, closely watched by observers of Europe’s largest economy.

After German growth halved between January and March compared with the previous three months, to 0.3 percent, analysts argued the slowdown was likely a blip that would be corrected in future quarters.

But “it will get harder and harder to explain these monthly drops with one-offs like the weather or the timing of vacation,” ING Diba bank analyst Carsten Brzeski commented. “Evidence is piling up that the soft patch at the start of the year has been more serious than previously thought.”

Surveys of confidence among investors and business leaders have also fallen from the euphoric levels seen late last year.

Financial players and firms are plagued by uncertainty on several fronts, including the threat of US President Donald Trump’s tariffs on metals imports from close allies like the European Union escalating into a full-blown trade war.

Other fears hanging over the European economy range from financial markets punishing Italy’s newly-installed populist government for its big-spending plans, potentially pitching the eurozone into a renewed crisis, to stalled progress in negotiations over Britain’s March 2019 departure from the EU.

“It’s hard to judge to what extent uncertainty in the foreign trade environment played a role” in the slide in orders, the economy ministry in Berlin said in a statement.

The government economists noted that discounting orders for large vehicles like aircraft, trains and ships showed a much smaller fall in contracts of just 0.6 percent in April.

Firms’ order books remain wellfilled despite the repeated slips in new contracts, they added.