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Business

Slump in orders hits German factories

Industrial orders in Germany have experienced an unexpected drop, according to preliminary figures from the National Statistics Office (Destatis). But analysts insisted the decline was of a temporary nature only.

Destatis reported Wednesday that factory orders across Europe's powerhouse decreased by 0.7 percent in July month on month, adjusted for seasonal and calendar effects.

Orders from within Germany fell by 1.6 percent and those from eurozone neighbors were down 1.0 percent.

Contracts from the rest of the world increased by 0.6 percent, but were not enough to offset the slump in Europe.

Consumers take a break

The statistics office noted that demand for German products was down across all sectors, with orders for consumer goods logging the largest decline at 3.0 percent.

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VP Bank economist Thomas Gitzel said one shouldn't overestimate monthly fluctuations in industrial orders as they tended to be highly volatile.

"But it'll be interesting indeed to see which impact a stronger euro will have on order books in the months ahead," he commented. "The rapid rise of the euro vs. the dollar has the potential of slowing down production in a number of industries."

The German Economy Ministry said it was not concerned about the drop In July, pointing to positive half-year results.

"Ordering activity remains at a very high level, and according to many indicators, the solid upturn should continue."

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hg/jd (AFP, Reuters)

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