German Factory Orders Fall 2.8%

The worse-than-expected decline in German factory orders is a particulalry harsh blow to the Eurozone outlook. Germany has been touted as the “engine” that will power the region to recovery but if the lastest result showing a decline of 2.8 percent in German factory orders is any indication, the so-called engine could be stalled.

June’s 2.8 percent drop is the first decline in factory orders in four months and is nearly double the prediction of a 1.5 percent pullback. As a result, German business confidence fell to its lowest point in more than a year last month on fears that the Eurozone’s debt crisis is getting worse.

“Germany’s industrial sector has slowed down sharply in recent months on the back of weaker world trade growth,” said Aline Schuiling, an economist at ABN Amro in Amsterdam. “The escalating sovereign-debt crisis and recent turmoil of financial markets will probably hurt confidence and activity.”

Source: Bloomberg