German industrial orders fell significantly more than expected in August, adding to signs that manufacturing in Europe's largest economy will not recover in the coming months.
Orders fell by 5.8% on the previous month on a seasonally and calendar adjusted basis, the federal statistics office said Monday.
A Reuters poll of analysts had pointed to a fall of 2.0%.
"Today's data confirm that demand for German industrial goods has continued to weaken," Commerzbank's senior economist Ralph Solveen said. "This suggests that the German economy will at best stagnate in the second half of the year."
A revival is not expected until next year and even this is likely to be very modest, Solveen said.
One reason for the negative result in August was the very large orders for transport equipment - such as aircraft, ships, trains and military vehicles - placed the previous month.
Excluding large-scale orders, new orders in August were 3.4% lower than in July.
The statistics office revised up the all-items figure for July to show a 3.9% increase on the month from a previous figure of 2.9% due to a considerable volume of orders reported late by establishments.
The less volatile three-month on three-month comparison showed that new orders were 3.9% higher in the period from June to August than in the previous three months.
Of all the G7 nations, Germany has the highest share of exports in its gross domestic product and is highly dependent on orders from abroad, said Thomas Gitzel, chief economist at VP Bank.
"If these fail to materialise, the entire economy suffers," Gitzel said.
Foreign orders fell by 2.2% on the month. Orders from outside the euro zone increased by 3.4%, whereas orders from the euro zone dropped by 10.5% on the month.
"As long as incoming orders are weak, the German economy will continue its dry spell," Gitzel said.
Indicators point to weak demand in the coming months.
Germany's manufacturing sector contracted at its fastest pace in a year in September, driven by sharp declines in output, new orders and employment, PMI data for manufacturing showed last week.
"Chinese stimulus and falling interest rates are upside risks, but we need to see a shift in what is currently a persistently depressed trend in short-leading indicator to shift our stance on German, and euro zone manufacturing," said Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics.
