German Manufacturing Orders Fall Sharply, Defying Expectations

By Todd Buell 

        FRANKFURT--Manufacturing orders in Europe's largest economy fell sharply on the month in March, defying expectations of a slight rise and signaling slower growth to come in Germany after a very strong first quarter.
        On the month, new orders fell 2.8% in adjusted terms, data from the country's statistics office showed Wednesday, missing economists' expectations of a 0.2% rise in a Wall Street Journal survey. The increase in February was raised to 0.9% from the 0.6% initially reported.
        Orders from abroad pulled down the index, with foreign orders declining 4.6% on the month. Among those, euro-zone orders took a particularly strong hit and were down 9.4%. This followed a 6.5% rise in the previous month. Orders from outside the euro zone fell a more modest 1.7%. Domestic orders were down only 0.6%.
        In a separate news release, the country's Economics Ministry said that the sharp drop in orders in March meant that in quarterly terms orders were unchanged in the first quarter versus the last quarter of 2013. This masked, however, differences among regions. While domestic orders grew 1.9% on the quarter, foreign orders were mixed. Those from within the euro zone were down 4.6% on the quarter, but those from outside the bloc were up 0.7%.
        The ministry said these developments were significantly affected by highly volatile bulk orders. Excluding bulk orders, total new orders in the first quarter were up 1.9%. "All in all, the trend of industrial orders remains positive, but should weaken somewhat," said the ministry.
        The ministry hinted that the crisis in Ukraine was hurting orders. It said that in addition to the mild winter shifting production plans forward a "temporary restraint due to current geopolitical events" could contribute to a weakening in orders.
        Experts say that the German economy grew at a robust clip in the first quarter. In a report released late last month, the country's Bundesbank said that the economy grew "very strongly" in the first quarter, as industrial output picked up and the mild winter supported construction. Growth in the second quarter would moderate noticeably, the bank said.
        Write to Todd Buell at todd.buell@wsj.com
        (END) Dow Jones Newswires

        May 07, 2014 02:37 ET (06:37 GMT)