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.


Lebanon finance minister urges new reforms after Moody’s report

Updated 14 December 2018
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Lebanon finance minister urges new reforms after Moody’s report

  • Lebanon credit default swaps surge
  • Political wrangling adds to fiscal woes

BEIRUT: Lebanon’s finance minister said on Friday that a decision by Moody’s rating agency to change the country’s outlook to negative from stable proved the need to form a government and launch reforms.
Moody’s changed Lebanon’s outlook on Thursday while affirming its B3 rating, reflecting what it called an increase in risks to the government’s liquidity position and the country’s financial stability.
Saddled with a stagnant economy and the world’s third-highest rate of debt as a proportion of gross domestic product, Lebanon is also mired in political wrangling, with rival parties unable to form a government since May’s parliamentary election.
“Moody’s report today... confirms the importance of forming a government and starting reforms to restore confidence, reduce risks and reduce the deficit,” Finance Minister Ali Hassan Khalil wrote in a tweet.
“This is possible now, but we may lose the opportunity in months if the outlook remains negative,” he added.
The cost of insuring Lebanese sovereign debt against default this week rose to its highest level since the global financial crisis of 2008.
Overnight interbank rates for Lebanese pounds hit a 2018 high of 75 percent on Thursday. Two sources Reuters spoke to on Friday familiar with the rate said it had stayed at that level, while two others said it had dropped a bit.
The rates have not been this high since November 2017, when Prime Minister Saad Al-Hariri announced, and then rescinded, his resignation in a declaration that Saudi Arabia was widely believed to have coerced him into making.
“Once you have a government, it will have a positive impact on the market. Demand for dollars will decrease and things will go down again to the normal situation,” said one trader.