There was yet more disappointing data from Germany yesterday. The eurozone’s largest economy released December’s factory orders, which showed an unexpected drop of 1.6% month-over-month. The release followed a downwardly revised 0.2% fall in November and was well below expectations of a 0.3% increase. It is the second straight month of declines and the steepest fall since June 2018.
These are very worrying times for Germany and the eurozone as a whole. Let us remember that the GDP growth rate forecasts for 2019 have been lowered to 1% from 1.8%, down from 2.3% only last October. The fact that Germany has been the engine for growth across the eurozone for so long will concern all 27 member states, with Italy and France not doing too well either.
Construction PMI also dropped to 50.7 last month from 53.3 in December and is the slowest growth in construction activity in three months. It is the fastest slowdown in almost six years and housing activity increased at a much slower rate. Today we will see the European Commission forecasts and December’s industrial production figures from Germany – the reading is expected to climb to 0.7% from -1.9% in November, but it would hardly be surprising were the figure to come in much lower than this.