German industrial orders drop by 11.3% in January

German industrial orders plunged more than expected in January, official data showed Thursday, in another worrying sign for the crucial manufacturing sector in Europe’s biggest economy.

New orders, closely watched as an indicator of future business activity, fell 11.3 per cent from the previous month, federal statistics office Destatis disclosed to AFP on Thursday.

Analysts surveyed by financial data firm FactSet had expected a fall of six per cent.

Orders had unexpectedly surged 12 per cent in December, and January’s negative figure is in part explained by the month-on-month comparison.

The economy ministry said orders from the eurozone plunged more than 25 per cent, after a strong reading in December, while demand from elsewhere increased slightly.

January’s declines were spread across most sectors, with particularly heavy falls in orders for electrical equipment, metal and pharmaceutical products, the ministry said.

Destatis stressed that in a “less volatile” three-month comparison, new orders from November to January were 2.3 per cent higher than the previous three months.

Economist Jens-Oliver Niklasch from LBBW bank said the three-month comparison was “not a bad figure, once you get over the initial shock of January”.

But he added that it was “still not good enough to reverse the downward trend of the last few quarters. The economy remains in a slump.”

High inflation, costly energy and weaker demand from key market in China have all weighed heavily on Germany’s key manufacturing sector in recent months.

The industrial slowdown contributed to a wider downturn in the German economy, which shrank by 0.3 per cent in 2023.

The Bundesbank central bank expects a modest recovery to get underway in 2024, predicting growth of 0.4 per cent as inflation eases and demand picks up.

AFP