The crisis-ridden German industry is showing signs of stabilization. Their orders grew in September for the second month in a row, although only by 0.2 percent compared to August. This is mainly due to large orders and increased demand from abroad, as the Federal Statistical Office announced. Economists had expected a decline of one percent. However, growth in August was subsequently revised significantly downwards – from 3.9 percent to just 1.9 percent.
“The unusually high revision in August 2023 is due to incorrectly reported data in the production of data processing equipment, electronic and optical products,” explained the statisticians. This is another reason why economists are not yet predicting a trend reversal. “After the sharp declines until the spring, there are now signs of just a stabilization,” said Commerzbank chief economist Jörg Krämer. “Industrial production should tend to fall in the coming months.” This is also signaled by the three-month comparison, which is less prone to fluctuations: here, incoming orders from July to September were 3.9 percent lower than in the previous quarter.
Europe’s largest economy is threatened with a new recession
Rising interest rates and high energy prices are currently weighing on demand. Europe’s largest economy is therefore threatened with a new recession after shrinking by 0.1 percent in the summer quarter. Many experts are expecting another minus for the current fourth quarter. “The warehouses have to be cleared out even more, the prices of many industrial inputs have to become even cheaper and interest rates have to fall again before a new upswing begins, which is then reflected in a sustained increase in order books,” said the chief economist at VP Bank, Thomas Gitzel .
Domestic orders fell by 5.9 percent in September compared to the previous month. According to the German Chamber of Commerce and Industry (DIHK), they are at their lowest level since May 2020, when the corona pandemic caused disruption. “Due to great uncertainty, high costs and growing bureaucratic burdens, companies in this country are holding back on demand for industrial goods,” said DIHK economic expert Jupp Zenzen. “Investments are on the back burner.” Foreign demand, on the other hand, grew by 4.2 percent. Orders developed very differently in the individual sectors. Mechanical engineering reported growth of 8.5 percent in September, as did manufacturers of metal products. In metal production and processing, the increase was even more significant at 8.7 percent. “However, the decline in incoming orders in the production of data processing equipment, electronic and optical products had a strongly negative impact,” it said. There was a slump of 12.5 percent, which, however, follows a strong increase of 19.9 percent in August. This time the auto industry reported a decline of 2.5 percent.