Factory orders in Germany fell in August at their fastest rate for five years. Orders were down 5.7% compared with the previous month — the biggest drop since January 2009. Analysts had anticipated a fall of 2.5%, according to a forecast compiled by Bloomberg.

The German economy ministry ‘shrugged off’ the figures, blaming them on factory closures due to the school holidays. A spokesman said: “Germany, like the USA, is a union of federal states. By a quirk of decision-making at state level, all of the works vacations in the most important states for the German economy fell in August this year, instead of being distributed between July and August, as they usually are.”

The spokesman pointed out that companies like Volkswagen AG closed their biggest works down for three weeks, and the workers who stayed behind were carrying out maintenance, rather than making cars — thereby explaining a 25% drop in car production in August.

Furthermore, Morgan Stanley cautioned against “reading too much into a single report” considering that factory orders rose by 4.9% in July.

Holger Schmieding, chief economist at the Berenberg Bank, said: “This one data point is of course massively distorted by the timing of factory holidays. However, we don’t expect much more than stagnation in the German economy for the remainder of the year. Geo-politics is holding back the economy for now.” He added that he expects the German economy to expand by “no more” than 0.1% in the both the third and fourth quarters.

Meanwhile, Carsten Brzeski, chief economist at the ING Diba bank in Frankfurt, argued that the German economy is in ‘rude health’, pointing out that “wages are growing at an annual rate of 3%, which is a decent clip given that inflation isn’t even 1%. The jobless rate, at 6.5%, is near a record low and there are more people at work than ever before. It’s quite clear that the economy isn’t dead, and we’re a long way from needing another short-term stimulus.”