Status: 06.12.2022 10:55 a.m
After two setbacks in a row, German industry received more orders again in October. Experts see this as an indication that the recession could be weaker.
German industry has again received more orders. This fuels hopes of a mild winter recession. Thanks to increasing foreign demand, orders increased by 0.8 percent compared to the previous month, as reported by the Federal Statistical Office.
Economists surveyed by the Reuters news agency had only expected growth of 0.1 percent, so the increase was unexpectedly strong. September saw a 2.9 percent decline and August orders were down 2.0 percent.
slump in consumer goods
A look at the details reveals interesting aspects: While domestic orders fell by 1.9 percent in October, those from abroad grew by 2.5 percent. Demand from the euro zone increased by 2.6 percent, and new business with the rest of the world rose by 2.5 percent.
Orders for capital goods such as machines, vehicles and systems increased this time by 3.2 percent, with the strong demand for motor vehicles making a major contribution. The manufacturers of intermediate goods saw a decline of 1.4 percent. On the other hand, orders for consumer goods fell by 6.3 percent.
A “touch of Santa Claus”
Chief economist Alexander Krüger from Hauck Aufhäuser Lampe Privatbank sees a “touch of Santa Claus” in the unexpectedly positive development – especially since the slump in the previous month was not as severe as initially reported.
“As a result, orders, which had increased significantly at times since the summer of 2020 as a result of catch-up effects and increasing supply bottlenecks, have now stabilized somewhat,” commented the Federal Ministry of Economics. “In addition to the slightly improved sentiment indicators, this is another indication that the recession could be weaker than feared, even if the outlook for industrial activity remains subdued.”
“Trend is clearly pointing down”
But the data also show weaknesses. Without major orders, orders would have fallen by 1.2 percent. Compared to October 2021, new business was also 3.2 percent lower after calendar adjustments. “The trend in incoming orders is clearly pointing downwards,” concluded Commerzbank chief economist Jörg Krämer. “This supports the assumption that the German economy is slowly moving in the direction of a mild recession, even if an economic slump like that after the financial crisis is unlikely due to the lack of gas rationing.”
The sluggish world economy, lack of materials and above all the energy crisis are currently affecting the industry. However, the companies are sitting on a thick backlog of orders, as many orders could not be processed due to a lack of preliminary products and raw materials. In addition, the supply chains are working better again. “This basically speaks for an increase in industrial production in the coming months,” said the chief economist at VP Bank, Thomas Gitzel.
Sales record for service providers
Meanwhile, the German service providers have accelerated their race to catch up after the corona easing at the end of the third quarter. The Federal Statistical Office announced today that sales in the service industry, excluding financial and insurance service providers, rose by 0.7 percent in inflation-adjusted (real) and nominal terms.
Compared to the same month last year, there was an increase of 12.0 percent in real terms and 15.9 percent in nominal terms. Aside from a moderate drop in revenue in June, price-adjusted sales in the services sector have risen steadily year to date, the agency said. “In September 2022, the service sector generated the highest turnover since the start of the time series in 2015.” The pre-Corona sales record from June 2019 was thus exceeded by 5.2 percent.