German Manufacturing Orders Slump in Sign of Deepening Gloom

(Bloomberg) -- German factory orders unexpectedly fell in January, piling on more evidence that Europe's largest economy continued to lose momentum at the start of year.

Orders were down 2.6 percent, the most since June, defying expectations for a 0.5 percent gain. The December reading was revised up to a 0.9 percent increase from an originally reported 1.6 percent decline. The January drop was caused by weak demand for investment goods, particularly from outside the euro area. Domestic orders fell.

The Economy Ministry said the level of bulk orders was about average in January, adding that the latest decline signals momentum in industry continued to cool at the start of the year.

More evidence of weakness comes a day after the European Central Bank slashed its 2019 outlook for the euro area by the most since the advent of quantitative easing, unveiled fresh stimulus and pledged to keep interest rates low for longer.

The Bundesbank has yet to update its projections. Its latest assessment was that Germany is seeing a dent in momentum and that growth this year will be below potential. The economy barely avoided a recession at the end of last year.

The euro fell after the report and traded at $1.1203 at 8:10 a.m. Frankfurt time.

--With assistance from Kristian Siedenburg, Harumi Ichikura and Catarina Saraiva.

To contact the reporter on this story: Piotr Skolimowski in Frankfurt at pskolimowski@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Jana Randow

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