Germany industry orders fall more than expected in November

BERLIN Tue Jan 8, 2013 11:29am GMT

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BERLIN (Reuters) - German industrial orders fell more than forecast in November due to a sharp drop in demand from abroad, Economy Ministry data showed on Tuesday, reinforcing concerns that Europe's largest economy may have contracted in the fourth quarter of 2012.

Seasonally and price-adjusted order intake dropped by 1.8 percent on the month, coming in below the mid-range forecast in a Reuters poll of 29 economists for contracts to fall by 1.4 percent on the month.

Domestic bookings increased by 1.3 percent while foreign orders fell by 4.1 percent. Orders from the euro zone inched up 0.2 percent but contracts from countries outside the currency union slumped by 6.5 percent.

The data for October was revised downwards to a rise of 3.8 percent from an originally reported increase of 3.9 percent.

The Economy Ministry played down the decline.

"A decline in orders after a strong month is not unusual," the ministry said in a statement.

"Overall, demand seems to be stabilising. The slight improvement in sentiment indicators also points to this," added the ministry.

The Ifo index, a key barometer of economic health in Germany, showed morale at German businesses rising in both November and December.

Germany's private sector expanded for the first time in eight months in December as the services sector rebounded, a survey from the purchasing managers' survey showed last week.

Germany's economy has weathered the three-year euro zone debt crisis well but it slowed in the third quarter of last year. Economists expect it to have contracted in the fourth quarter of 2012 but generally see it escaping a recession before gradually improving later this year.

Some economists took a more measured view.

"The continued weakness in incoming orders leads to the conclusion that industrial production is treading water. A look at forward-looking indicators gives no reason to sound the all clear," said Bernd Hartmann, head of investment research at VP Bank.

"Demand for capital goods remains low in view of the weak economic environment in Europe, where there is significant overcapacity in many places," he added.

(Reporting by Madeline Chambers and Gareth Jones)

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