Slump in orders in German industry
The sluggish world economy and high energy prices are also reflected in the order books of German companies. The setback is surprisingly strong. But economists point to the continued high order backlog in industrial companies.
The high energy prices and the slowing economy have left their mark on German industry. (icon picture)
Industry in Germany recorded a severe setback in incoming orders in November. According to the Federal Statistical Office on Friday, the order volume fell by 5.3 percent in a monthly comparison. Economists were surprised by the magnitude of the pullback. On average, they had only expected a slight decline of 0.5 percent. Year-on-year, November order intake fell 11.0 percent.
The Federal Ministry of Economics spoke of a downward trend, which continued to increase again. “However, the order data shows that the industry is going through a difficult winter, even if the business expectations of the companies have recently improved,” it said. “However, the order backlog in industry is still high, which is currently supporting production.”
The current decline is mainly due to falling foreign orders, which according to the Federal Statistical Office fell by 8.1 percent. Incoming orders from the euro zone fell by 10.3 percent and those from other countries by 6.8 percent.
In October, incoming orders in German industrial companies had risen by 0.6 percent month-on-month. However, the reading was revised down after previously reporting a 0.8 percent gain.
According to Thomas Gitzel, chief economist at VP Bank, incoming orders have reached their lowest level since July 2020. He referred to the slump in orders from abroad. “This shows how much the high energy prices are affecting the euro zone,” said Gitzel.
However, analyst Ralph Solveen from Commerzbank assumes that the downturn in incoming orders will hardly have an impact on industrial production. The companies have built up large order backlogs in the past two years. “In view of the weaker order intake and the burden of high energy prices, production may therefore fall in the coming months, but a slump is unlikely,” Solveen said.