German orders up but trend still down

INDUSTRIAL orders in western Germany rose 5.5 per cent in January from December but were down by 16 per cent on an annual comparison, the Economics Ministry said in Bonn yesterday.

The modest monthly improvement came after figures earlier this week showing a 3 per cent January increase in industrial output. But analysts cautioned against reading too much into the results, as the overall trend remained firmly directed towards deeper recession.

Despite the pressure the rapidly deteriorating economy is exerting on it, the Bundesbank, as expected, left its leading interest rates unchanged yesterday. But the last remaining condition for such a relaxation inched closer to being fulfilled, as the cabinet in Bonn approved the so-called Federal Consolidation Plan, designed to bring chaotic public finances under control.

Bonn would impose a combination of cuts in public spending and tax increases. But the package faces a difficult passage through parliament, where the regional state premiers have threatened to block it in the upper house. The government also approved an increase in government borrowing of DM9bn ( pounds 3.8bn).

A storm of protest greeted the government's decision to increase petrol and diesel taxes next year as well as introducing a motorway user fee, as a means of raising funds to finance the proposed reform of the railways.

The government settled on a fuel tax of 13 pfennigs (5p) a litre. Together with the motorway fee, initially to take the form of a charge for a windscreen sticker, it hopes to raise about DM8bn a year.

Factory orders in the US fell 1.3 per cent to a seasonally adjusted dollars 255bn in January, the largest decline since August, with aircraft accounting for much of the fall. First-time claims for unemployment benefits jumped 26,000 in the week ended 20 February, the largest increase in seven weeks.