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German recession looms as industry orders drop

Video Credit: Reuters Studio - Duration: 01:12s - Published
German recession looms as industry orders drop

German recession looms as industry orders drop

German industrial orders fell more than expected in August, adding to signs that a manufacturing slump is pushing Europe's largest economy into recession.

David Pollard reports.

Europe's growth engine is slowing.

And could soon go into reverse.

Such was the conclusion some analysts are drawing ... After a shock downside surprise in Germany's industry numbers on Monday (October 7).

August saw a 0.6 per cent month-on-month fall in orders - twice as bad as expected.

Prices for orders were down over six per cent on the year.

After contracting in Q2, another quarter of negative growth would officially put Germany into recession.

And last week, leading economic institutes slashed their forecasts, blaming weaker global demand and uncertainty linked to trade disputes.

Then, said DIW economist Claus Michelsen, there was Brexit.

(SOUNDBITE) (German) CLAUS MICHELSEN, ECONOMIST AT BERLIN'S DIW INSTITUTE, SAYING: "A disorderly Brexit would have a significant impact.

Our simulations show economic growth would likely be 0.4 percentage points lower next year and then a further 0.3 percentage points the following year." Even without a hard Brexit, growth has been downgraded.

From April's forecasts of 0.8 per cent this year and 1.8 next .... They're now predicting 0.5 and 1.1 per cent, respectively.




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