German factory orders slip

Preliminary data released by the German Economy Ministry on Wednesday showed a 0.9 percent decline in February factory orders over January. The drop followed a sharp 2.6 percent decrease in January, according to revised figures for that month.

However, for the three-month period covering December, January and February, which economists say provides a more accurate picture, factory orders rose 0.5 percent compared to the previous three months.

Nevertheless, the ministry said in a statement that momentum had "slowed" at the beginning of 2015, in particular in terms of orders from abroad. Bulk orders had also declined, it said, while domestic orders from Germany were providing "the positive effect" for the three-month period.

"But as a whole, the trend in German industry remains one of modest growth," the ministry said, pointing to strong confidence indicators.

No worries

The second monthly decline in a row disappointed analysts, who had penciled in growth of 1.5 percent for February according to a poll conducted by financial services firm FactSet.

But Christian Schulz of Berenberg bank in London said the data did "not pose a serious risk" to Germany's first-quarter economic growth that had been forecast to reach 0.6 percent.

"German manufacturers benefit from the firming demand in the eurozone and the weak euro elsewhere, as well as the aggressive ECB easing and fading risks," he told the news agency AFP. "But the strongest growth driver at the moment is domestic demand and especially cheap-oil-fuelled private consumption."

ING-DiBa economist Carsten Brzeski called the data an "unexpected disappointment," with the German industry still "treading water" compared with the start of last year.

Brzeski also told AFP that the weak euro and "brimming order books" should provide a boost in the coming months.

"If past performances are any guide for the future, German exporters can start rubbing their hands," he said.

uhe/cjc (AFP, dpa, Reuters)