Oct. 7 (Bloomberg) -- German factory orders slipped for the first month in three during August, a survey of economists showed, a sign the recovery in Europe's largest economy may have sputtered during the vacation period. Factory orders probably fell 0.1 percent from July, according to the median forecast of 14 economists surveyed by Bloomberg News. Germany's Economics and Labor Ministry will release the report at noon today in Berlin. Germany's $2.3 trillion economy, which contracted in the first half, is showing signs of reviving. Germany manufacturing activity outpaced that of France and Italy during September, and business confidence climbed to a 2 1/2 year high. ``There are signs of hope -- but business conditions are still poor,'' said Dieter Wermuth, a consultant to UFJ Bank Ltd. and a former aide to the German government's panel of economic advisers.
Orders declined partly because more school holidays were in August than in the previous month, boosting the number of vacation days claimed by workers, according to J.P. Morgan Chase & Co. Germany's recovery isn't yet guaranteed. The euro has climbed 5 percent against the dollar in the past month, threatening to hobble companies' efforts to benefit from a global recovery. Chancellor Gerhard Schroeder last week said the euro's exchange rate is one of the ``dangers'' facing the economy. The euro climbed to $1.1735 at 8:40 a.m. in Frankfurt from $1.1709 yesterday. It reached a record of $1.1933 on May 27.
Consumers, Unemployment
German consumers, whose spending accounts for more than half the economy, are also keeping a tight rein on shopping as unemployment stays near a 4 1/2 year high. Retail sales dropped for the third month in four during August. Germany's jobless rate probably stayed at 10.6 percent in September, according to the median forecast of 10 economists surveyed by Bloomberg before a report on Thursday. Still, investors are betting Germany's economy will recover. Germany's benchmark DAX Index has jumped 55 percent since touching a seven-year low in March.
Shoppers are showing signs they may soon start to spend more as they anticipate 22 billion euros ($25.6 billion) worth of tax cuts next year. Thomas Cook AG, Europe's largest travel company, last month said fourth-quarter profit will rise as consumer confidence picks up. Consumers are the most optimistic in almost a year, a survey by GfK AG market research company released last week showed. Executives in Germany and across the euro region are also becoming more optimistic about a recovery as they benefit from a rebound in the U.S. and Japan and avail of interest rates at the lowest level seen in more than half a century. Epcos AG, a German maker of electronic components whose customers include Nokia Oyj and Sony Corp., last week said demand and orders picked up in the three months through September. //www.bloomberg.com