German factory orders unexpectedly dropped for a second straight month in February due to stagnation in domestic demand and a decline in foreign bookings, suggesting that activity in the biggest euro area economy remained subdued at the start of the year.
Factory orders dropped a seasonally-and-working-day adjusted 0.9 percent from January, data from the Economy Ministry showed, defying economists’ expectations for a 1.5 percent gain in the volatile indicator.
The decline in January was revised to 2.6 percent from 3.9 percent. It was the biggest fall since August last year, when orders tumbled 5.5 percent.
Domestic orders remained unchanged from the previous month, while foreign demand decreased by 1.6 percent. New orders from the euro area dropped 2.1 percent but those from other countries declined 1.3 percent.
Orders for intermediate good fell 1.2 percent and those for capital goods decreased 1.1 percent. Meanwhile, demand for consumer goods grew 2.9 percent.
Despite the decline in orders, the Economy Ministry said that the trend in industry continue to point moderately upward. Orders fell for two months in a row for the first time since June last year.
The German manufacturing sector grew faster than initially estimated in March, marking the strongest improvement in eleven months, survey data from Markit Economics showed last week. The country’s unemployment rate fell to a record low in March.
February industrial production data, due tomorrow, is expected to reveal the monthly growth easing to 0.1 percent from 0.6 percent in January. The year-over-year growth figure is forecast to drop to 0.6 percent from 0.9 percent.