German industrial orders plunge the most since 2009

Bookings from countries outside the Euro zone plummeted 9.9%, while those from within the single currency bloc fell by 5.7%. Domestic orders also dipped by 2.0%

German industrial orders tumbled in August by their largest amount since the height of the global financial crisis in 2009, casting a shadow over Europe's largest economy at a time when Berlin faces pressure to loosen the fiscal reins and spend more.

Data from the German economy ministry showed contracts plunged 5.7 per cent on the month, far weaker than a Reuters consensus forecast for a 2.5 per cent drop.

Bookings from countries outside the Euro zone plummeted 9.9 per cent, while those from within the single currency bloc fell by 5.7 per cent. Domestic orders also dipped by 2.0 per cent.

"That clearly bodes ill for the fourth quarter," said Carsten Brzeski, senior economist at ING. "It's not only a Putin fear factor - Germany is also suffering from the weakness of its euro zone peers."

The German economy had a strong start to the year but shrank by 0.2 per cent in the second quarter and some economists have warned it could contract again in the third quarter, pushing it into a technical recession.

The bad economic news comes at a time when Germany faces pressure from partners and the European Central Bank to spend more to help boost stalling European growth. German Chancellor Angela Merkel's government has said it has little wiggle room for stimulus given its promise to balance the federal budget next year.

A media report at the weekend said the International Monetary Fund (IMF) will this week cut its estimates for German economic growth in 2014 and 2015 to around 1.5 per cent for each year due to the crises in Ukraine and West Asia.

The Economy Ministry said manufacturers took on fewer bulk orders than average in August and added that orders in July - which were revised up to a rise of 4.9 per cent from a previously reported gain of 4.6 per cent - had been boosted by the late summer holidays.

But it said that even taking such volatility into consideration, order levels were weak overall due to the subdued Euro zone economy and uncertainty caused by crises abroad.

Factories producing capital goods had a particularly rough month, with 8.5 per cent fewer orders flowing in than in July, while intermediate goods manufacturers also suffered.

Consumer goods orders, which were up by 3.7 per cent thanks to a surge foreign contracts, were the only bright spot.

The weak data comes after a survey last week showed Germany's manufacturing activity shrinking for the first time in 15 months in September as new orders dried up.

Orders lie 0.3 per cent below second-quarter levels, the Economy Ministry said.