BERLIN: German factory orders unexpectedly fell in August in a sign that Europe’s largest economy is vulnerable to weaker growth in China and other emerging markets.
Orders, adjusted for seasonal swings and inflation, dropped 1.8 percent after decreasing a revised 2.2 percent in July, data from the Economy Ministry in Berlin showed on Tuesday. The typically volatile number compares with a median estimate of a 0.5 percent increase in a Bloomberg survey. Orders rose 1.9 percent from a year earlier.
A China-led slowdown in emerging markets that threatens Germany’s export-oriented economy is exacerbated by an emissions scandal at Volkswagen AG that could affect as many as 11 million cars globally. Still, business confidence unexpectedly increased in September as the economy benefited from strengthening domestic demand on the back of record employment, rising wages and low inflation.
“While order data in August were overall disappointing, it’s too early to fall into a panic about the economy because orders from within the country and the currency union amid all the volatility still point upward,” said Stefan Kipar, an economist at Bayerische Landesbank in Munich. “However, high uncertainty about China and the cooling of the Chinese economy has left its mark.”
