Economy: German industry is doing better than it has for a long time – economy

Orders from German industry rose more sharply in December than they have in more than a year due to improved demand from Germany and the euro zone. The orders increased by 3.2 percent compared to the previous month, as announced by the Federal Statistical Office on Monday. Thanks to many large orders, the highest growth since September 2021 was achieved. Economists had only expected an increase of 2.0 percent.

In addition, the slump in November, at a revised minus 4.4 (previously: -5.3), was not quite as severe as initially assumed. Compared to December 2021, however, the order level was 10.1 percent lower. “Demand in the manufacturing sector stabilized somewhat again towards the end of 2022,” writes the Federal Ministry of Economics. Like the improved business climate, this indicates “that the economic slowdown in the winter half-year is likely to be milder”.

According to Commerzbank chief economist Jörg Krämer, the strong increase in orders in December should be seen primarily as a countermovement to the slump in November. “The trend in incoming orders is clearly pointing downwards,” Kramer warned against too much optimism. “In the coming months, this should increasingly have an impact on industrial production, which has been quite stable up to now.” During the pandemic, orders were left that were then processed. This boost will decrease.

The sales trend also shows that the situation is difficult: In December, price-adjusted receipts in the manufacturing sector were 1.7 percent lower than in the previous month, after an increase of 2.5 percent in November.

Exporters expect renewed momentum

Domestic orders in December grew by 5.7 percent compared to the previous month, those from abroad increased by 1.2 percent. While demand from the euro zone increased by 9.8 percent, new business with the rest of the world fell by 3.8 percent. Orders for capital goods such as machines, vehicles and systems stagnated this time. The manufacturers of intermediate goods saw an increase of 9.7 percent. Orders for consumer goods fell by 3.3 percent. The sluggish global economy, lack of materials and the energy crisis are currently affecting the industry.

However, exporters are now looking to the future with more optimism than they have in almost a year. The barometer for export expectations climbed in January for the fourth month in a row. “German exporters are hoping for new momentum at the beginning of the year,” says Ifo President Clemens Fuest. One reason for this is China: Germany’s most important trading partner has now ended its zero-Covid policy, which could give new impetus to the world’s second largest economy after the USA. In turn, German industry should also benefit from this.

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