German factory orders plummet in January

German factory orders plunged in January, official data showed on Thursday, falling by far more than expected.

According to Destatis, the Federal Statistics Office, price-adjusted new orders tumbled 11.3% on December, when they jumped by an upwardly revised 12%. Most analysts had been anticipating a 6% decline.

Year-on-year, new orders fell 6%.

Destatis attributed the fall to the high volume of large-scale orders in December, noting: "In January, the volume was back to an average level. This base effect is particularly pronounced in the manufacture of electrical equipment, [which fell] 33.2%."

Other transport equipment, including aircraft, ships and trains, was another heavy faller, down 27.3%.

Overall, foreign orders fell 11.4%. Orders from the eurozone area slumped 25.7% but rose 1.6% outside of the single currency region. Domestic orders were 11.2% lower.

December’s figure was revised upwards by 3.1 percentage points.

Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said: "Volatility in major orders - singe orders above €50m - continues to drive significant volatility in these data, and larger-than-usual revisions. The significant upward adjustment of the December headline was due to the late reporting in some sectors.

"The volatility in major orders can be safely ignore insofar as it doesn’t drive the underlying trend - which, as it turns out, remains weak. New orders excluding the major order component fell 2.1% month-on-month, reversing a 0.9% increase in December."

Germany, Europe’s largest economy, is heavily reliant on manufacturing. But the sector been hit hard by soaring energy prices, record inflation, higher interest rates and weaker global demand.