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German Factory Orders Fall Unexpectedly

“German factory orders unexpectedly fell in January as the sovereign debt crisis curbed demand in the euro area.

Orders, adjusted for seasonal swings and inflation, declined 1.9 from December, when they rose a revised 1.1 percent, the Economy Ministry in Berlin said today. Economists forecast a 0.6 percent gain, according to the median of 41 estimates in a Bloomberg News survey. In the year, workday- adjusted orders dropped 2.5 percent.

The Bundesbank expects the German economy to rebound in the current quarter after contracting 0.6 percent in the final three months of 2012. Confidence among entrepreneurs and investors jumped in February and retail sales rose the most in more than six years in January. At the same time, the euro area, Germany’s largest export market, is in a recession and theEuropean Central Bank predicts only a gradual recovery later this year.

“After a long series of encouraging sentiment indicators, today’s new orders are a disappointment” and “a painful reminder that the crisis is not over yet,” said Carsten Brzeski, senior economist at ING Group in Brussels. “While the solid labor market and a sharp increase in retail sales in January already confirmed the growth-supportive role of consumption, the strengthening of industrial activity remains a very gradual and choppy one.”

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