German industrial orders fell unexpectedly in July on feeble domestic demand while bookings from abroad remained flat, data showed on Wednesday, in a rare sign of weakness in Europe`s largest economy.
The surprisingly weak orders data follows a series of buoyant economic figures that have underlined the strength of the German economy and its consumption-led upswing before an election in which Chancellor Angela Merkel is seeking a fourth term.
Factories registered a 0.7 percent drop in orders after contracts for goods `Made in Germany` rose by 0.9 percent in June, data from the Economy Ministry showed. The reading for July undershot the Reuters forecast for a 0.3 percent rise.
"This is not adding fuel to the hype about the economy," Bankhaus Lampe economist Alexander Krueger said. But the overall trend in orders is still pointing upward, so the dip in July is probably nothing more than a breather, he added.
Excluding volatile bulk orders, orders rose by 0.6 percent in July, the ministry said.
Stefan Kipar from BayernLB said that the stronger euro did not seem to have dampened orders activity so far, with bookings from countries outside the 19-member single currency bloc rising by 0.6 percent against the trend in July.
A data breakdown showed domestic demand fell by 1.6 percent while foreign orders were unchanged.
"Order activity remains on a very high level," the ministry said. "In the past three months, German companies have registered nearly as many orders as they did before the outbreak of the economic and financial crisis in 2008."
Orders and sentiment indicators pointed to a continuation of the solid upswing in the sector, the ministry added.
Recent figures have shown the number of Germans out of work falling further, consumer morale improving and the manufacturing sector expanding.
The German economy grew by 0.7 percent on the quarter in the first three months of the year and by 0.6 percent from April to June, driven by increased household and state spending as well as higher investment in buildings and equipment.
The International Monetary Fund (IMF) expects the German economy to grow by 1.8 percent in 2017 and by 1.6 percent in 2018 in real terms. This would be slightly below the 1.9 percent in 2016, which was the strongest rate in five years.
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