German Factory Orders Slump as Foreign Demand Plummets

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German factory orders plummeted in October as demand for investment goods declined, putting the economy on weak footing in the final months of the year. 

Orders fell 6.9% following a 1.3% increase the previous month. That's the biggest drop in the volatile index since August and a worse reading than predicted by a single economist in a survey of 23 conducted by Bloomberg.

Germany's industry-focused economy is being hit by a squeeze on material and transportation, rising inflationary pressures and a new wave of Covid-19 infections. Those factors could slow the rebound, which still is below pre-crisis levels, according to the OECD. 

Companies are facing unprecedented delivery times for inputs and a majority of manufacturers plan to raise prices, according to Ifo, which has seen its business climate index fall for five consecutive months.

Orders for investment goods recorded a disproportionate drop of almost 11%, driven by a slump of orders from outside the euro area. 

“The second sharp decline in orders within the last three months has put a further damper on the economic outlook,” Germany's Economy Ministry said in a statement. 

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