Falling demand

German factory orders fell sharply in July, official figures suggest, with the country's economy ministry blaming a drop-off in foreign demand for the greater-than-expected decrease.

Provisional data from the Federal Statistics Office, Destatis, showed a decrease of 1.4 percent month-on-month, following an increase of 1.8 percent in June. The decline was more than twice as much as the 0.6 percent forecast in several surveys of economists.

"Domestically, demand continued to develop cautiously, even though machinery builders had cause for cheer as they received numerous orders in July," the German Ministry for Economic Affairs and Energy said, highlighting one of the month's bright spots.

"Taken together, these data suggest a further slight upward tendency in the manufacturing sector," it said.

The decline is the biggest since January and comes alongside a sharp drop in overall foreign demand for German-made products.

Export orders fell by 5.2 percent, while domestic orders increased by 4.1 percent, the ministry calculated. Although the recovery in the eurozone boosted orders by 2.2 percent, this could not compensate for the shortfall in orders from outside the single currency area. These were down by as much as 9.5 percent, reflecting jitters about the slowdown in China.

Manufacturers of intermediate goods recorded decreases in new orders of 0.2 percent on the previous month and capital goods decreased 1.6 percent. There was a sharp drop in new orders for consumer goods of 6.3 percent.

The fall in orders comes despite a decline in the value of the euro compared to the dollar of around 20 percent since last year. A weaker euro generally makes German exports more competitive outside the eurozone.

sgb/ng (Reuters, dpa, AFP)