Via The Wall Street Journal
By ANDREA THOMAS
BERLIN — German manufacturing orders fell for the fifth straight month in January as demand crumbled, especially in countries outside the euro zone, data released by the economics ministry showed.
Orders dropped a seasonally adjusted 8% from December, turning the slump, which began in September, into “the deepest five-month fall since Germany’s reunification,” a ministry spokeswoman said.
Compared with a year earlier, orders were down 37.9% in January, following a downwardly revised annual drop of 28.2% in December. “That was the biggest annual drop since 1991,” the ministry spokeswoman said, referring to the January data. Germany started compiling joint data in 1991 following the reunification of the country.
The data bode ill for industrial production in coming months, with the ministry saying the outlook “remains very depressed.”
Analysts echoed the warning. “These data are truly terrible. They imply continued sharp falls in output,” said Dominic Bryant, economist with BNP Paribas. “Even before today’s release, output was likely to fall for the next two or three months. Now those falls will probably be sharper and extend further into 2009.”
Alexander Koch, economist with UniCredit Research, called the short-term outlook for Europe biggest economy “absolutely ugly.”
German manufacturing orders have been falling since December 2007, with the exception of a rise in August, according to the economic ministry. In December, orders fell a downwardly revised 7.6%, compared with a previously reported 6.9% decrease. January’s manufacturing-order data would have been even worse if they hadn’t been boosted by an unusually high level of big-ticket orders.
Foreign orders in January dropped 11.4%, while domestic orders fell 4.3% from December, the ministry said. Orders from countries that share the euro currency fell just 1.2%, while demand from states outside the euro zone plummeted 18.2% on the month.
Orders for investment goods showed the strongest decline, down 9.1% from December as orders from countries outside the euro zone tumbled by 24.1% on the month, while demand from euro-zone countries was up 7.8%.
The German economy fell into recession in the fourth quarter, contracting 2.1% from the previous quarter. The economy will shrink at least 3% in 2009, the Bundesbank warned Tuesday.