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.


British PM May: 'I will not break up my country for EU Brexit deal'

Updated 21 September 2018
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British PM May: 'I will not break up my country for EU Brexit deal'

  • Theresa May hits back with angry statement after EU leaders rejected May’s Chequers plan
  • Sterling plummets as both sides warn they are planning for a no-deal scenario

LONDON: British Prime Minister Theresa May said on Friday Brexit talks with the European Union had hit an impasse, defiantly challenging the bloc to come up with their own plans a day after the bloc’s leaders savaged her proposals.
At a summit in Austria on Thursday, EU leaders rejected May’s “Chequers” plan, saying she needed to give ground on trade and customs arrangements for the UK border with Ireland.
The British media said the response had left her proposals in tatters, and May angrily struck back in a televised address from her Downing Street office, saying neither side should expect the impossible from the other.
“Throughout this process, I have treated the EU with nothing but respect,” May said. “The UK expects the same. A good relationship at the end of this process depends on it.”
Sterling extended its losses as May spoke, falling to as low as $1.3080, about 1.4 percent on the day, putting it on course for its biggest one-day drop this year, over growing fears Britain could leave the EU without any deal.
May has said the Chequers proposals for trade with the EU, which would resolve arguments over the border of Northern Ireland with the Irish Republic, were the only way forward. EU leaders in Salzburg repeated their view that the plans would undermine their cherished single market.
After the summit, EU leaders said they would push for an agreement next month, but both sides have warned they are planning for a no-deal scenario.
“It’s not acceptable to simply reject the other side’s proposals without a detailed explanation and counter proposals,” May said. “So we now need to hear from the EU what the real issues are, what their alternative is, so that we can discuss them. Until we do, we cannot make progress.”
May, who commands a majority in parliament only with the support of a small pro-Brexit Northern Irish party, said she could not agree to any deal which treated Northern Ireland differently to the rest of the United Kingdom.
The EU insists that there can be no hard border between the British province and the Irish Republic, with Northern Ireland remaining in the bloc’s customs union or effectively establishing a border in the Irish Sea if no alternative deal is reached.
“I will not overturn the result of the referendum nor will I break up my country,” she said. “We need serious engagement on resolving the two main problems in the negotiations and we stand ready.”
However, she said no matter what happened, the rights of three million EU citizens living in the United Kingdom would be protected.
Earlier, her Brexit Secretary Dominic Raab said some EU leaders had shown unstatesmanlike behavior in Salzburg.
“We’ve already compromised hugely with the Chequers proposals,” Raab told BBC TV. “What we’re not going to do is be salami sliced throughout this negotiation in a typical style that the EU engages in without movement on the other side.”
For the British media, the message from Salzburg had been clear. “Your Brexit’s broken,” the Daily Mirror newspaper said.
Newspapers led their front pages with a Reuters picture showing May, dressed in a red jacket, standing apparently aloof and alone from a mass of suited male EU leaders.
May faces a fight with angry Conservative lawmakers at her party’s annual conference from Sept. 30.
Many have voiced opposition to her plans, which they said would bind Britain into much EU regulation in return for free trade, and some would prefer a no-deal “hard Brexit” in March, despite warnings that would ravage the British economy.
“Theresa May’s Brexit negotiating strategy has been a disaster,” opposition Labour leader Jeremy Corbyn said. “The Tories have spent more time arguing among themselves than negotiating with the EU.
“The political games from both the EU and our government need to end because no deal is not an option.”
In response to May’s statement, the Confederation of British Industry and other business bodies said they wanted to see constructive dialogue, not rhetoric.
Last week, London Mayor Sadiq Khan added his voice to those including union and business leaders who said there should be a second Brexit referendum. Scotland’s top court ruled on Friday that the European Court of Justice should consider whether Britain could unilaterally change its mind on Brexit.
“The referendum was the largest democratic exercise this country has ever undergone,” said May, who has repeatedly ruled out a second vote following the original 2016 referendum. “To deny its legitimacy or frustrate its result threatens public trust in our democracy.”