Manufacturing orders in Germany fell unexpectedly for a third straight month in May, adding to concern for Europe's largest economy. Manufacturing orders fell a seasonally adjusted 2.2pc in May from April, reflecting weaker exports due to the strength of the euro. Economists had forecast that orders to edge up 0.2pc. According to the figures from the economy and labour ministry, the decline in May was due to a 4.8pc decrease in foreign orders. Domestic orders rose 0.2pc. "The rise in the exchange rate of the euro may, in addition to the weak world economy, be evident in the significant decline in foreign demand," the ministry said.
Although the euro has dropped sharply from its recent all time high above USD1.19, at its current level of USD1.1465, it is still up 10pc in the year to date, putting pressure on export demand. Last month, the Ifo institute said it does not expect the economy to grow at all this year, joining fellow economic institutes IfW and HWWA in cutting their 2003 growth forecast to zero. The German government still expects the economy to grow by 0.75pc this year. //www.fxcentre.com