Recession fears mount as German factory orders plunge

FRANKFURT, Oct 07 (AFP): German industrial orders fell more than expected in August, official data showed Monday, adding to fears that Europe's largest economy will end the year in recession.

New orders, closely watched as an indicator of future business activity, plunged by 5.8 per cent month-on-month, according to federal statistics agency Destatis, following an upwardly revised increase of 3.9 per cent in July.

Analysts surveyed by financial data firm FactSet had been expecting a much smaller decline of 1.8 per cent in August.

Excluding large orders, which can be volatile month to month, August orders would have been down 3.4 per cent.

Germany's crucial manufacturing sector has been hit hard by higher energy costs in the wake of Russia's war in Ukraine and cooling demand from abroad, contributing to a wider downturn that saw the economy shrink in 2023.

With no signs of an imminent recovery, leading economic institutes have downgraded their forecasts in recent weeks and now see the German economy stagnating or slightly contracting again in 2024.