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Business

German factory orders slump for third month

German industrial orders, a key measure of demand for goods in Europe's biggest economy, fell again in September. It was weighed down by declining demand from countries that use the euro.

German industrial orders slumped for the third consecutive month in September, sending a warning signal about the outlook for Europe's largest economy. The Federal Statistical Office said Thursday that orders fell 1.7 percent in seasonally adjusted terms compared with the previous month, following drops of 1.8 percent in August and a 2.2 percent drop in July.

New orders from the countries using the euro currency were down 6.7 percent, while new orders from other countries increased 0.7 percent. UniCredit economist Andreas Rees says the "strong decline in the headline figure is a negative surprise" but "no reason to panic."

He says taking into account some one-off effects, "it is a bump in the road, but nothing more." Rees predicted a strong technical rebound of 2 to 3 percent in October.

Dark clouds on the horizon?

By contrast, Commerzbank economist Ralph Solveen said the data were a signal "in the coming months economic growth in Germany will remain sluggish at best."

Symbolbild Export mit Rekordüberschuss

Germany's manufacturers have been shipping less goods to Eurozone countries

"Obviously, it would be premature to panic after a single new order data release. However, the fact that new orders have dropped for three consecutive months suggests that our positive take on the German industry got some scratches," said ING DiBa economist Carsten Brzeski.

Provisional official data showed a decrease of 1.7 percent month-on-month, following declines of 1.8 percent in August and 2.2 percent in July.

Analysts polled by financial services firm FactSet had pencilled in an increase of 1.0 per cent for September.

The decline was attributable to weaker foreign demand for German-made goods. Export orders fell by 2.4 percent, while domestic orders slipped by 0.6 percent, the ministry calculated.

Orders from the eurozone tumbled by 6.7 percent, while orders from outside the single currency area edged up 0.7 percent.

tko/cjc (dpa, AP, AFP)

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