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A shock fall in German industrial orders has reinforced concerns that Europe’s largest economy is struggling, in the face of global trade tensions and the Brexit crisis.
German factory orders slumped by 4.2% in February, compared with January, new data from the country’s economic ministry shows.
That’s the worst monthly fall in two years, dashing hopes of a small rebound, and follows a 2.1% decline in January.
On an annual basis, factory orders were a painful 8.4% lower, suggesting that Germany’s industrial heartland has weakened over the last year.
The Ministry says orders from beyond the eurozone were particularly poor:
Domestic orders decreased by 1.6% and foreign orders fell by 6.0% in February 2019 on the previous month.
New orders from the euro area were down 2.9%, new orders from other countries decreased 7.9% compared to January 2019.
Orders for capital goods (heavy duty machinery) slumped by 6% month-on-month, a sign that companies around the world were reluctant to sign off expensive projects in the current climate. Consumer goods orders fell by 3.5%.
Germany is already teetering on the brink of recession, having not posted any economic growth in the second half of 2018.
Economists had hoped that its manufacturing sector had turned the corner, but such a sharp decline in new orders suggests that production could be weak for the next couple of months.
This bad news comes as US and Chinese officials keep negotiating a possible trade war truce in Washington. President Donald Trump is expected to meet with Chinese Vice Premier Liu He later today.
Investors and industrialists alike will be hoping for a breakthrough that lifts the tariffs imposed on exports last year.
The International Monetary Fund will highlight more problems in the world economy later today, when it releases its Global Financial Stability report.
- 1.30pm BST: US initial jobless claims
- 2pm BST: IMF releases its Global Financial Stability Report