October 7, 2019
By Paul Carrel
BERLIN (Reuters) – German industrial orders fell more than expected
in August on weaker domestic demand, data showed on Monday, adding to
signs that a manufacturing slump is pushing Europe’s largest economy
into recession.
Contracts for ‘Made in Germany’ goods fell 0.6% from the previous
month, with demand for capital goods down 1.6%, the Economy Ministry
said. The overall fall compared with a Reuters consensus forecast for a
drop of 0.3%.
“The German economy is in the midst of a recession. Today’s data make
that clear again,” said Thomas Gitzel, economist at VP Bank Group.
The economy shrank by 0.1% in the second quarter, and recent data
have pointed to continued weakness in manufacturing in the third
quarter. Most economists define a recession as two straight quarters of
contraction.
“The German government will probably come under growing pressure to give up its strict budget policy,” added Gitzel.
The government has so far stuck to its balanced-budget policy,
despite pressure from economists and other governments to spend more to
boost flagging demand.
Finance Minister Olaf Scholz said last week that Germany would be
able to cope with an economic crisis but added that he did not expect a
downturn to be as bad as it was in 2008/2009.
“The weakness in demand in industry continues,” the Economy Ministry
said in a statement accompanying Monday’s data. “The industrial sector
remains subdued for the time being.”
Germany’s export-reliant manufacturers are suffering from a slowing
world economy and business uncertainty linked to a trade dispute between
the United States and China as well as Britain’s planned but delayed
exit from the European Union.
Monday’s weaker-than-expected data added to the sense of gloom around the German manufacturing sector.
A survey released last Tuesday showed the manufacturing recession
deepened in September, with factories recording their weakest
performance since the world financial crisis a decade ago.
Last Wednesday, leading economic institutes slashed their growth
forecasts for the economy for this year and next, blaming weaker global
demand for manufacturing goods and increased business uncertainty linked
to trade disputes.
The institutes also called on Chancellor Angela Merkel’s coalition
government to ditch its budget policy of incurring no new debt if the
growth outlook deteriorates. It has so far refused to do so.
https://www.oann.com/german-industrial-orders-drop-on-weak-domestic-demand/
