German manufacturing orders slumped by 8 per cent in January, posting their fifth big drop in as many months in the latest sign that Europe's largest economy will again contract sharply in the first quarter of 2009.
Preliminary Economy Ministry figures released today showed the second biggest decline in orders since German reunification in 1990, dwarfing a consensus forecast in a Reuters poll for a fall of 2.2 per cent.
The figures compounded the bleak picture of Germany's economic health painted by other recent economic indicators. Germany's trade surplus narrowed to its lowest level in over seven years in January as exports dived, data showed yesterday.
The ministry said December's orders data had been revised to show a 7.6 per cent drop, versus 6.9 per cent previously reported. Orders have fallen nearly every month since the end of 2007, though the slump has accelerated rapidly since last September.
As the world's largest exporter of goods, Germany enjoyed robust foreign demand for its engineering products until the economic downturn took hold last year and sent the export-orientated economy sharply into reverse.
The orders data showed an 11.4 per cent decline in foreign demand, with domestic orders falling by 4.3 per cent. The slump in the overall orders figure extended a run of sharp falls in the prior four months.
The government expects the economy to contract by 2.25 per cent this year. Since World War Two, Germany's economy has never contracted by more than one per cent in a single year.
The Economy Ministry said the prospects for industrial production remained "extremely subdued."
Reuters