-Christian Schulz, senior economist at Berenberg Bank
It seems that even German economy is losing momentum, as a slew of disappointing fundamental data continued on Friday, with a report from the Destatis showing the number of new factory orders barely advanced in February. Orders, adjusted for a seasonal swings and inflationary pressure picked up only 0.6% from the previous month's revised figure of 0.1%. While analysts expected only a 0.5% expansion, the figure itself is pointing at a sluggish growth. On a annual basis orders gained 6.1%, decelerating from previous month's 7% increase. Moreover, the figure fell short of analysts' expectations. Earlier, a report showed that activity in the manufacturing sector is slowing, as the factory gauge expanded at the slowest in four months.
While the number of orders is growing and both manufacturing and services PMI remain above the 50 mark, the latest trends in the business sentiment can be interpreted as an alarming sign. According to the Ifo Institute for Economic Research, a gauge of business climate, which is based on a survey of 7,000 executives, fell to 110.0 this month from 111.3 in February that was the highest level since July 2011. Additionally, German ZEW economic sentiment continued a steep decline in March, extending its longest streak into what is already three-month long.
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