Weaker foreign demand prompted an unexpectedly big dip in German manufacturing orders in August, but as the data followed three months of robust gains, analysts said Germany remained on course for a third quarter recovery.
Adjusted for seasonal swings, orders fell 3.7 percent on the month, the biggest drop since December 2002 and a much larger decline than economists had forecast. However, this followed one of the sharpest 3-month surges in orders in recent years.
The drop was led by a 6.2 percent slump in foreign orders, which had risen by over eight percent in July. Foreign demand for capital investment goods fell by almost nine percent. Total domestic manufacturing orders fell 1.3 percent.
Economists polled by Reuters last week had forecast a monthly decline of 2.0 percent. Forecasts ranged from a drop of 4.0 percent to a gain of 0.2 percent.
"The decline should not be exaggerated because we had strong gains over the last few months," said Ulrike Kastens, an economist at Sal. Oppenheim. "Despite the drop, gross domestic product seems to be developing solidly in the third quarter."
The Economy Ministry said the orders data, which were up by 5.6 percent from August 2004, ought to be regarded as a "small correction" of the increases posted between May and July.