German industrial orders plunged a surprise four per cent in March month-on-month, the first fall this year, official figures showed last Thursday.
Economists surveyed by Dow Jones had expected orders in Europe’s biggest economy to be unchanged from February. Domestic orders fell 3.5 per cent and by 4.3 per cent from abroad, the economy ministry said.
In February, orders had climbed a revised 1.9 per cent from January, compared with the previously reported 2.4 per cent rise. In January they soared 3.1 per cent month-on-month.
The figures were adjusted for inflation and seasonal and calendar effects. The ministry said there was a significantly under-average number of large orders in March, something which might have skewed the data.
On a less volatile two-monthly comparison, orders were a seasonally adjusted 1.4 per cent higher in February and March compared to December and January, the government said.
For the first quarter as a whole, orders were 2.3 per cent higher than in the first three months of 2010.
“Despite the recent fall, the recovery trend is continuing,” the ministry said, calling the drop in March part of a “normalisation” in Europe’s powerhouse after the record recession of 2009 and the strong rebound last year.
Output plunged a record 4.7 per cent in 2009 but rose 3.6 per cent in 2010.
Dirk Schumacher, senior European economist at bank Goldman Sachs, also cautioned against writing off the German economy just yet.
“This is a volatile series and large monthly changes may occur. We would need at least two months of declines before being able to assess whether any material change has occurred,” Schumacher said.
He added that business sentiment remained strong, with the latest reading of the closely watched Ifo survey suggesting industrial orders resumed their upwards trend in April.
Andreas Rees, chief Germany economist at Unicredit, said the drop in March was the steepest decline since January but that orders data are often volatile during an upswing.
“Although even our below-consensus forecast turned out to be too optimistic, we think there is no reason to worry or even to panic,” Rees said in a research note.
“This is not the end of the upswing but only a short – but admittedly brutal – interruption... The latest new orders figure does not mark a turnaround in the business cycle.”
He added that he expected a slowdown to set in only at the end of the year, as indicated by the Ifo survey.
Other recent data have been more positive.
Orders for the important German machine tools sector surged 32 per cent in the first quarter compared to the first three months of 2010, sector federation VDMA said last Tuesday, predicting it would create 20,000 jobs this year.
German retail sales however showed the biggest monthly drop in March since January 2009, data revealed last Friday, but economists again warned that the numbers were volatile.