RTTNews - German factory orders stagnated as expected in April after rising in March for the first time since August 2008.

Despite rising domestic demand, factory orders stayed flat in April on a monthly basis compared to March's revised growth of 3.7%, the Federal Ministry of Economics and Technology reported Monday. The unchanged reading for April matched economists' expectations.

Domestic orders were up 0.6%, while foreign orders slipped 0.5% in April. Demand from the euro area dropped 0.7%, following a robust 6.2% increase in March.

Orders for intermediate goods and consumer goods rose 6% and 2.6% respectively, while those for capital goods were down 4.4% in April from the previous month.

In the two-month comparison, demand for manufacturing products increased 2%, which was the first rise since December 2007. Only reason behind this growth was 4.7% rise in foreign demand as domestic orders were down 0.7%.

On an annual basis, total orders plunged 37.1% in April, severe than the 26.5% decrease seen in the previous month. Economists were expecting only 33% decline.

The ministry said the outlook noticeably improved in the medium term. With the last unchanged order activity and the positive result of the previous month increased the chances of stabilizing the demand for industrial products.

In contrast to the views expressed by the ministry, Ralph Solveen, a Commerzbank analyst said the large growth in industrial orders did not mark a beginning of impressive counter movement following the collapse in 2008. Now Commerzbank expects orders to fall in the months ahead.

Again, stagnation in factory orders argues against a broad based and speedy recovery of industrial production, which Commerzbank expects to have fallen by 1.5% in April. This indicates that GDP for the second quarter would again turn out negative, though much less than in the first three months of 2009.

Last week, the Bundesbank said it expects the German gross domestic product to contract 6.2% in 2009 and forecasts economic activity to remain subdued in 2010. Further, the bank said the biggest Eurozone economy could gain some ground in the third quarter of 2009 as monetary and fiscal stimuli ease tensions in the international financial markets.

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