German Machinery Output Plummets In February
FRANKFURT (AP) -- Orders for German machinery and factory equipment slumped by 49 percent in February, the VDMA industry association said Wednesday as it slashed its full-year production forecast.
The Frankfurt-based VDMA said it now expects machinery production and factory building to decline 10 percent to 20 percent during the year, compared with the previously forecast 7 percent.
A decline in that range would mark the sharpest decrease since 1993 when output fell 12 percent.
The VDMA said having to change its forecast just six weeks after the last projection of a 7 percent decline for the year was "extremely displeasing."
"Though the decline in orders and sales leaves us no other choice," Hannes Hesse, a VDMA director said in a statement.
"As before, it's still unclear if and when investors will find the trust," in the economy to start spending again, Hesse said.
The machine tool industry is a key sector in Germany, whose economy depends heavily on manufacturing exports.
The VDMA group said February orders for machinery were 49 percent below the level of a year earlier. It said domestic German orders were 45 percent below February 2008 levels, while international orders were down 50 percent.
Germany went into recession in last year's third quarter as the global economic crisis eroded global demand for its products.
Germany is Europe's biggest economy and the world's largest exporter, with its economy heavily dependent on sales of goods outside the country.
Analysts have forecast the country's economy will shrink by between 3 percent and 7 percent this year.
VDMA has said that last year's fourth quarter of 2008 was the worst three-month period since 1958. Machinery orders, which are often placed years in advance of delivery, declined by 7 percent in 2008.