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German Machinery Orders Slump, Job Cuts Rise

Wed, 03/04/2009 - 4:14am
George Frey, AP Business Writer

FRANKFURT (AP) -- Germany's economy continued to suffer in January, industry reports showed Wednesday, with orders for machinery and factory equipment falling 42 percent during the month and 25,000 job cuts expected this year.

The Frankfurt-based VDMA industry group said domestic orders fell 31 percent in January, while orders from other countries slumped by 47 percent.

In the three months from November through January, the machinery industry recorded a 38 percent decline in orders -- domestic orders fell 34 percent, while international orders fell 39 percent.

"Orders for January were based on the meager levels from the prior month December," Ralph Wiechers, the VDMA's chief economist said in a statement.

He said a recovery is not in sight, in light of continuing uncertainty in the market and the production cuts many companies have initiated as a result of the world economic crisis.

"Better news from the machinery sector will remain rare for some time," Wiechers said.

Earlier this year, the group said it expected the machinery and factory equipment industry to record a 7 percent decline in overall production in 2009, the sharpest fall since 1993.

The group said the sector could lose 25,000 jobs in 2009 as a result. In 2008, the German machinery industry added 40,000 jobs.

Germany remains the world's largest exporter, with its machinery and cars still leading the way, but declining sales, especially at car companies, have been acute.

On Wednesday, Germany's Federal Statistical Office said sales of raw materials and components -- an early indicator of industrial production -- fell 4.6 in January, compared with the same month in 2008.

The office said sales of consumer products fell 7 percent for the period.

In late February, the Federal Statistical Office confirmed that economic output during the October through December period contracted 2.1 percent compared with the previous quarter, hurt by a 7.3 percent slump in exports, which had long been the mainstay of the Germany's growth.

The fourth-quarter GDP decline was the third in a row, and the economy is expected to contract sharply this year.

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