In January, German factory orders plunged unexpectedly, more than reversing the December’s rebound. On a monthly basis, German factory orders dropped by 2.7% M/M, while the consensus was looking for a second straight jump (by 0.6% M/M). The details show that weakness was based in foreign orders (-5.5% M/M), especially from non-euro zone countries (-8.6% M/M), while orders from euro zone countries dropped only slightly (by 0.4% M/M). Domestic orders, on the contrary, rebounded slightly (by 0.9% M/M after falling by 1.8% M/M in December). Orders for capital (-5.5% M/M) and consumer (-2.9% M/M) goods dropped in January, while intermediate goods orders rose by 1.9% M/M. The German Economy Minister added that weakness for industry orders was largely due to a lack of large orders. Order data are usually volatile, but this outcome is a disappointment as survey data suggested that business climate is improving, but we have not yet received confirmation from the hard data. We hope that today’s production data will show a brighter start of the year.