According to German statistics office Destatis, German manufacturing orders fell sharply in the start of the year, offsetting much of the improvement seen in December and highlighting the obstacles faced by Europe’s largest economy to overcome the recent downturn.
Price-adjusted new manufacturing orders tumbled by 11.3 per cent in January compared to December when they soared by an upwardly revised 12 per cent. Analysts had called for a six per cent decline in January. Compared to January of last year, new orders fell by six per cent.
“The downward trend that has been observed for two years continued in January,” Commerzbank economist Ralph Solveen said. “This suggests that industrial production will continue to fall in the coming months and thus contribute to the German economy shrinking again in the first quarter.”
Meanwhile, the US economy experienced a modest expansion from the beginning of the year, while consumers showed more sensitivity to rising prices, the Federal Reserve said in its compilation of anecdotal evidence from businesses on economic conditions in each of the 12 Fed districts, known as the Beige Book.
The report, released on Wednesday, showed that eight districts noted a slight to modest improvement in activity; three others reported no change; while one district reported slight deterioration.
Consumer spending, especially on retail goods, was marginally down in recent weeks according to the report, as households became more sensitive to higher prices and consumers continued to trade down and sacrifice spending on discretionary goods. The adverse effects of high inflation have not gone away, the report noted, but prices moderated again in the start of the year.
Finally, Chinese exports soared in the first months of the year, raising hopes that global demand is recovering, as the world’s second-largest economy navigates around US trade curbs and geopolitical tensions.
During the January and February period, China’s outbound shipments rose by 7.1 per cent compared with the same period the prior year, higher than the 2.3 per cent increase reported in December, according to official data released on Thursday. The increase handily exceeded the three per cent increase forecast by economists.
Trade in China was under pressure last year given weak demand from many of its major trading partners, while US trade sanctions and geopolitical tensions are hampering the country’s ability to mount a sustained turnaround.
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