BERLIN, May 7 (Xinhua) -- Germany's industrial orders fell by 4.1 percent quarter-on-quarter in the first three months of 2026, official data showed Thursday, as a pullback in defense and infrastructure-related demand has followed a surge late last year, while escalating Middle East tensions have weighed on the outlook.

On a monthly basis, incoming orders rose by 5 percent in March from February, the Federal Statistical Office said. Foreign demand was particularly strong, with orders from the eurozone jumping by 10.1 percent during the month.

Germany's industrial sector had shown tentative signs of recovery since the second half of 2025 after years of weakness, with orders gradually rebounding. However, that momentum has come under renewed pressure after tensions in the Middle East escalated in late February, raising concerns over higher energy costs and supply disruptions.

"The fluctuation (in March) was likely driven by front-loading effects," the German economic ministry said in a statement on Thursday.

The Middle East conflict has triggered an energy shock that would likely feed through into other goods prices with a lag, the ministry said, adding that companies may have brought forward orders in March in anticipation of rising costs or potential supply bottlenecks.

It also warned that supply constraints have recently intensified in particular sectors and that business sentiment indicators have deteriorated again, suggesting industrial activity was slowing.

A Monday report by S&P Global showed Germany's manufacturing Purchasing Managers' Index (PMI) slipped to 51.4 in April from 52.2 in March, though it remained above the 50-point threshold that separates growth from contraction.

Business expectations had turned negative while cost pressures and supplier delivery delays have worsened to their highest since 2022, the report said.

Germany's manufacturing PMI climbed above 50 in February for the first time in more than three-and-a-half years, briefly raising hopes that the country's long-struggling industrial sector was stabilizing. ■