German manufacturing orders collapse

BERLIN, Dec 5 - German manufacturing orders plunged in October after a record decline the previous month, pointing to a deepening recession in Europe’s biggest economy.

Orders fell 6.1 per cent in October, led by a sharp downturn in demand from Germany’s euro zone trading partners, preliminary economy ministry data showed on Friday. Economists had forecast a rise of 0.4 per cent in a Reuters poll.

Compounding the bad news, which helped to send the euro to a session low against the dollar, was a downwards revision to the September result to show a decline of 8.3 per cent.

”German industry seems to be drowning in the financial crisis,” said Carsten Brzeski, an economist at ING Financial Markets. ”What started off as a relatively normal correction from very high levels has developed into serious collapse.”

Domestic orders fell 6.1 per cent, with foreign orders down 6.2 per cent, led by a drop in demand from the euro area.

”Industrial production will decline further in coming months due to the persistent weakness in orders,” the ministry said.

German business sentiment is near its lowest level in 16 years, and a survey of manufacturing firms showed the outlook for new orders got worse in November.

Further highlighting the economy’s woes, premium carmaker BMW said global sales plunged by a quarter in November as even wealthy consumers cut their spending.

A survey by the Ifo economic think tank showed a growing number of German firms are finding banks’ lending conditions restrictive, particularly larger ones.

The German economy is already in recession and fears are mounting the country could be facing its biggest economic downturn next year since the second world war.

Deutsche Bank chief economist Norbert Walter told a newspaper that German gross domestic product could contract by up to 4 percent in 2009.

This would be four times as bad as its previous worst one-year performance since West Germany’s creation in 1949.

The ministry data showed orders for capital goods fell 8.2 per cent in October, with those for intermediate goods down 4.5 per cent. Consumer goods orders fell by 1.6 percent.