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(CEP News) Frankfurt - With the continued weakness seen in German factory orders data on Friday, economists said they expect the manufacturing sector to follow suit, in turn leading the German economy to a slowdown.
According to the Bundesbank, German factory orders fell 0.9% month-over-month in May, deepening the 1.7% fall recorded in April. However, economists had expected a slight recovery of a 0.8% gain for the month that would have bhalted the deteriorating trend in orders that began in early 2008. While German factory orders suffered from weakening domestic demand - domestic orders declined 2.7% in May after rising 0.3% in the previous month -foreign orders recovered slightly, rising 0.8% in May following April's 3.7% fall. Without adjusting for calendar effects, factory orders fell 2.0% in June. Economists had expected orders to rise 2.0% following April's 15.2% gain, which was revised up from 15.0%. With May's fall marking the sixth month in a row where German factory orders declined, Natixis euro zone economist Costa Brunner noted an alarming trend for both German industry and the economy. "This applies in particular for foreign orders from euro zone's trading partners as well as orders for the German capital goods producing sector; both have lost ground within the last few months," Brunner said. "It is clear that the boom in the manufacturing sector is over," Commerzbank analyst Matthias Rubisch said in a research note to clients, adding that the six-month trend pointed to a slowdown in the whole sector. "Given globally deteriorating conditions, no more than a stagnation of manufacturing output can be expected for the rest of the year," Rubisch said. Thus, as the manufacturing sector was the principal source of strength for the German economy over the past few years, Rubisch concluded that only modest growth levels in the country would be expected. No significant market reaction was noted upon the release of German factory order data. By Todd Wailoo,
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