Falling demand abroad hits German industrial orders in May

German industrial companies sustained a sharp drop in incoming orders in May, largely as a result of falling demand from non-EU countries, data showed on Friday, raising fresh fears about the health of Europe’s biggest economy, analysts said.

Industrial orders -- which are closely watched as a barometer of the outlook for Germany’s vital manufacturing sector -- shrank by 2.2 percent in May, the country’s statistics office Destatis said in a statement.

The decline -- after two successive months of growth -- was steeper than the 0.15 percent drop predicted by analysts polled by Factset. The outlook for German producers has been gloomy in recent months owing to knock-on effects from the mounting US-China trade conflict and tensions between Washington and Brussels.

“Devastating new orders data just undermined any hopes for an industrial rebound. We are starting to lose our optimism,” said Carsten Brzeski, an analyst at ING.

While domestic orders rose 0.7 percent, foreign demand dropped 4.3 percent -- with those from EU nations dipping 1.7 percent while orders from further afield plunged 5.7 percent.