Fear of slowdown as German orders drop
Published 09/09/2010 | 05:00
GERMAN factory orders fell sharply in July pointing to slowing growth in Ireland's third-largest trading partner.
Figures published yesterday show new orders slumped by an unexpected 2.2pc in July after surging by 3.6pc the previous month.
The July fall represents the biggest monthly drop in factory orders since February 2009, when the German economy was in the grip of recession.
Evidence of slowing growth comes after the German economy expanded at the fastest pace in two decades in the second quarter, boosted by exports.
"It's a sign that Germany can't decouple from the global economy," said Alexander Koch, an economist at UniCredit in Munich.
"While this is a backlash against last month's surge and monthly figures can be volatile, the economy simply can't continue to grow at the same pace as in the first half of the year."
Despite the recent surge in growth, German economists and politicians have been warning that any growth could quickly come to a halt as the US economy splutters and governments elsewhere in Europe curb spending.
Data due to be released today is expected to show German exports stagnating in July after jumping by 3.8pc in June and by 7.9pc in May.
However, the latest industrial drop in orders was "no reason to worry" said Carsten Brzeski, European economist at ING. "We would characterise it as the expected correction after several strong months.
"Deriving any double-dip ideas from today's numbers would be exaggerated and very premature," he added.