German factory orders tumble

According to Destatis, the Federal Statistics Office, new orders in manufacturing fell 10.7% month-on-month, and by 11% on March 2022. That compares to a month-on-month increase of 4.5% in February. Analysts had been expecting a far more modest fall, of around 2.2%.

Destatis said it was the strongest decline since April 2020, at the start of the pandemic.

Although orders fell across most sub-sectors, the slump was driven by a slide in miscellaneous vehicle construction orders, which includes ships, trains, aircrafts, spacecrafts and army vehicles. Orders slumped 47.7% from a 55.0% hike in February.

Motor vehicles and parts was another heavy faller, down 12.2%.

Over the first quarter, new factory orders were 0.2% higher than the fourth quarter of 2022.

Destatis also posted figures for real turnover in manufacturing on Friday, showing a 2.9% decline in March compared to February.

Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics, said: "This is a terrible headline, but a big fall had been coming given weak surveys and the outsize increase in one-off major orders, mainly in transport equipment.

"Usually we only see this kind of collapse in manufacturing orders when Germany is about to go into recession.

"[The] data are consistent with our view that the first-quarter upturn in manufacturing will reverse sharply in the second quarter, weighing on investment and inventory accumulation. This will hold GDP growth close to zero, even as consumer spending begins a gradual rebound."