* Orders from euro zone slide by 10.4 pct
* Big-ticket contracts well below June average
* Ukraine crisis seen having limited impact on Q2 hard data
(Adds economist and company comment, detail)
By Michelle Martin
BERLIN, Aug 6 German industrial orders fell in
June at their steepest rate since September 2011 as euro zone
demand weakened and bulk orders were below average, with the
Economy Ministry suggesting this was in part due to uncertainty
over the Ukraine crisis.
Suggesting output in Europe's largest economy will have a
weak start to the third quarter, contracts fell by 3.2 percent
on the month as orders from the single currency bloc plunged by
10.4 percent, data from the Economy Ministry showed.
Big-ticket orders were well below their usual June levels
and without them, bookings increased by 1.1 percent on the
The headline figure missed the Reuters consensus forecast
for a 1.0 percent rise and undershot even the lowest estimate
for a 0.5 percent decrease.
The Economy Ministry said "geopolitical developments and
risks" probably led to more cautious ordering and a spokesman
told a news conference that alongside the uncertainty caused by
the tension between Russia and Ukraine, factors such as weaker
euro zone appetite and lower bulk orders had also played a role.
NATO said on Wednesday Russia had amassed around 20,000
troops on Ukraine's eastern border and could use the excuse of a
humanitarian or peacekeeping mission to send them in.
Analysts played down any impact of the Ukraine crisis on
orders so far. Commerzbank economist Ralph Solveen said the
strong decline in orders was due exclusively to a drop in
notoriously volatile areas such as plane and ship orders, which
he said was likely caused by a strong euro and a weaker global
"Production is likely to fall in the coming months and that
increases the risk the German economy will, after a slight dip
in the second quarter, also disappoint in the third," he said.
The German economy grew at its strongest rate in three years
in the first quarter but that was largely due to mild weather
and it is generally seen slowing or even stagnating in the
second quarter before accelerating again in the third.
A spokesman for the Economy Ministry told the news
conference the German economy nonetheless remained "intact".
Andreas Rees, chief German economist at UniCredit Research,
said while the downside risks had increased due the tension
between Russia and Ukraine, hard data did not suggest it had
taken its toll on companies in the second quarter.
Last week the European Union imposed sanctions targeting
Russia's banking, defence and energy sectors. On Monday Germany
said it had permanently halted Rheinmetall's planned
export of combat simulation equipment to Russia.
Werner Deggim, head of German engineering firm Norma Group
, told Reuters he was not particularly worried about
the sanctions: "They won't have a serious effect on our
business," he said, confirming the company's full-year forecast
for 4 to 7 percent revenue growth.
The Economy Ministry said the order level in the second
quarter was 0.6 percent below the level of the first quarter,
largely due to weaker appetite at home. That could be a concern
for the German government, which is relying on domestic demand
to prop up growth this year as exports remain weak.
The ministry said growth in the industrial sector would tend
to be moderate in the coming months.
Factories producing capital goods got 6.4 percent fewer
bookings in June than in the previous month and contracts for
consumer goods manufacturers dipped slightly. Intermediate goods
orders were the only bright spot, rising 1.6 percent.
Data due out on Thursday is expected to show industrial
output climbed by 1.3 percent in June.
The orders data for May was revised up to a drop of 1.6
percent from a previous -1.7 percent.
(Editing by Alexandra Hudson and Alison Williams)