Germany’s Economy Ministry reported this morning that factory orders for June fell by a seasonally adjusted 1.7%, double the expected decline of 0.8%. Compared with June 2011, orders fell by 7.8%.
The big drop was attributed primarily to lack of demand from Germany’s eurozone partners, from which demand fell by 4.9% in June. Domestic orders fell by 2.1% and demand from non-eurozone nations fell by 0.6%.
This is all very bad news for Germany’s export-driven economy. The country has managed to dodge most of the economic slowdown in Europe, but its dependence on the eurozone market for its manufactured goods has become clear in recent months.
Germany is about to discover that it cannot escape the financial crisis that is sweeping the eurozone, but the country’s economy is likely to grow only very slowly until the crisis is finally resolved. Germany’s economy is expected to grow by a paltry 1% in 2012, while the outlook for the eurozone is for negative economic growth of around -0.3%. And the more Germany demands austerity from its neighbors, the longer the country’s economy will take to recover.