German Factory Orders Slide as Virus Forces Curbs on Activity
(Bloomberg) -- German factory orders fell for the first time in eight months after the spread of the coronavirus forced the euro area’s biggest economy and many of its trading partners into lockdowns.
Demand dropped 1.9%, damped by investment goods and orders from the euro area. Orders were still up more than 6% from the previous year.
The manufacturing sector has held up better than services in recent months as global supply chains and external demand were less badly affected by the virus than during the first wave of infections in 2020. Restaurants and wide parts of the retail sector are much more directly hit by the latest restrictions, which are set to run at least until the middle of February.
The government in Berlin cut its growth forecast for the year to 3% from 4.4% last month. It agreed this week to further support companies and citizens hit by the fallout from the pandemic, including through the increase of the amount of losses a business can write off against tax.
While the German economy eked out growth of 0.1% in the final three months of last year, it’s headed for a contraction in the first quarter amid the drawn-out curbs on activity. The slow and chaotic start to vaccinations across the euro area is threatening to compound the challenge.
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