German industrial orders plunge in ‘horrible start’ to year

Contracts for German-made goods fell by 3.9 percent on the month in January after a downwardly revised leap of 3.0 percent in December. (Reuters)
Updated 08 March 2018
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German industrial orders plunge in ‘horrible start’ to year

BERLIN: Weaker foreign demand drove a bigger-than-expected drop in German industrial orders in January, suggesting that busy factories in Europe’s largest economy could shift into a lower gear in the coming months.
Christmas and New Year factory closures that extended well into January played a part, and commentators warned against reading too much into one month’s data.
Contracts for German-made goods fell by 3.9 percent on the month in January after a downwardly revised leap of 3.0 percent in December, the Federal Statistics Office said on Thursday.
The reading was the weakest since January 2017 and the fall was bigger than the 1.6 percent drop predicted in a Reuters poll of analysts. Excluding big-ticket items, orders were still down 2.4 percent on the month.
“German new orders had a horrible start to the new year,” ING economist Carsten Brzeski said.
He stressed that economic fundamentals remained good and order books were still filled though, adding: “German industry does not look at risk of faltering anytime soon.”
The economy ministry said the overall trend in industrial orders was still pointing upwards despite the drop in January, adding that bookings were up 0.9 percent in December and January compared to the previous two months.
Industrial orders rose 8.2 percent on the year in January, the ministry said, adding that surveys are suggesting the global recovery will continue. “So German industry is likely to continue its positive development,” it said.
Foreign demand fell by 4.6 percent on the month in January, driven by a decline in orders of nearly 6 percent from other euro zone countries, a breakdown of the data showed.
Orders for capital goods dropped 5 percent, demand for intermediate goods fell 3.3 percent, while manufacturers of consumer goods registered a rise in orders of 2.4 percent.
The data suggested industrial orders could post a quarterly decline at the start of 2018 for the first time in quite a while, said Alexander Krueger of Bankhaus Lampe.
While factories are likely to run at full speed for now to process their order books, the threat of protectionism is already clouding the outlook, Krueger said.
A Sentix survey showed on Monday that investor morale in the euro zone deteriorated in March due to concerns about US President Donald Trump’s threats to impose hefty tariffs on steel, aluminum and car imports.
The Ifo institute said at the end of February that German business confidence fell more than expected as a stronger euro was a growing concern for exporters.
“Trump’s proposed trade tariffs are posing a real threat to the growth prospects (of German companies),” Krueger said.


‘No sign of waning appetite for oil’

Updated 22 September 2018
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‘No sign of waning appetite for oil’

  • Oil is so entrenched in the modern world that demand is still rising by up to 1.5 percent a year
  • Of the almost 100 million barrels of oil consumed daily, more than 60 million bpd is used for transport

LONDON: Global oil consumption will reach 100 million barrels per day (bpd) — more than double the level of 50 years ago — in months, according to an industry report by Reuters.
Despite overwhelming evidence of carbon-fueled climate change and billions in subsidies for alternative technologies such as wind and solar power, oil is so entrenched in the modern world that demand is still rising by up to 1.5 percent a year, said the report.
There is no consensus on when world oil demand will peak but much depends on how governments respond to global warming, according the International Energy Agency (IEA), which advises Western economies on energy policy.
OPEC Secretary-General Mohammed Barkindo told a conference in South Africa on Sept. 5 that global consumption would hit 100 million bpd this year, sooner than anyone had expected.
With a sophisticated global infrastructure for extraction, refining and distribution, oil produces such a powerful burst of energy that it is invaluable for some forms of transport such as aircraft.
Of the almost 100 million barrels of oil consumed daily, more than 60 million bpd is used for transport. Alternative fuel systems such as battery-powered electric cars still have little market share.
Much of the remaining oil is used to make plastics by a petrochemicals industry that has few alternative feedstocks.
Although government pressure to limit the use of hydrocarbons such as oil, gas and coal is increasing, few analysts believe oil demand will decrease in the next decade.
If the current mix of policies continues, the IEA expects world oil demand to rise for at least the next 20 years, heading for 125 million bpd around the middle of the century.