German factory orders crash in January, some economists sceptical

Demand for German manufactured goods ground to a screeching halt at the turn of the year, leading some economists to stress the volatile nature of the data, which was at odds with recent more upbeat survey data.

Total factory orders crashed by 7.4% month-on-month in January, according to the Federal Office of Statistics, outpacing forecasts for a decline of 2.5% by a wide margin.

January's print also more than reversed December's 5.2% advance, dragging the year-on-year rate down from a 8.0% gain for December to -0.8% fall for January.

"Overall, the crash in new orders is inconsistent with upbeat survey data, but we need to see more data and revisions to get a clearer picture. Our assumption remains that the German manufacturing sector is growing. It is also critical to smooth these data to get a sense of what is going on," said Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics.

The main culprit behind January's decline was a 9.9% month-on-month drop in orders for capital goods, led by a 16.3% crash in domestic orders.

Overall, total domestic orders were weakest, collapsing by 10.5% month-on-month, in the process undoing December's 7.4% rise, while foreign ones slipped by a more "modest" 3.7%.