German factory orders drop in December 2015

Low demand from domestic and eurozone markets dragged German factory orders in December 2015, official data showed on Friday, indicating a weak industrial production at the start of this year.

In December 2015, German manufacturers received 0.7 percent fewer orders than in the previous month, data from German Federal Statistics Office showed. In November 2015, new orders increased monthly by 1.5 percent.

"The positive impetus came mainly from the non-euro area in December," said the German Economy Ministry in a statement.

Compared with the previous month, domestic orders decreased by 2.5 percent, orders from the eurozone slumped by 6.9 percent, while new orders from countries outside the common currency area increased by 5.5 percent.

"The increasing demand from countries outside the euro area indicates a gradual recovery of the global economy," the ministry said, adding "Nevertheless, the expectations in industry have recently deteriorated somewhat and signal a rather modest recovery in industrial activity."

In spite of favorable economic data posted at the year start, the German industry cautioned against over-confidence on the economic performance.

A growth relied on low jobless rate, increasing wages, weak inflation, low interests and falling energy prices was vulnerable despite being robust, warned the Federation of German Industries last month.

Both public and private investment should be boosted in Germany, the group said.

In December 2015, the manufacturing orders of intermediate goods fell 2.0 percent and those of capital goods such as machines and tools decreased by 0.5 percent on the previous month.

Meanwhile, orders for consumer goods recorded an increase of 4.3 percent, in line with economists' expectation that private consumption would continue playing as the main driving force for German growth.

Companies were demanding policies to improve the overall business conditions, said Michael Groemling, an economist at the Cologne Institute for Economic Research.

High labor costs, strong market regulations and energy costs risk the economy's long-term growth, according to companies surveyed by the institute.

A lack of skilled workers also worried nearly half of German companies, the survey result published on Friday showed. Overall, 62 percent of German companies feared that the German economic performance would be sluggish in the future. Endit