Status: 06.01.2023 10:39 a.m
In November, German industry suffered the sharpest drop in orders for more than a year. The Federal Ministry of Economics speaks of a difficult winter.
Industry in Germany had to contend with a setback in incoming orders in November. According to the Federal Statistical Office, orders were 5.3 percent lower than in the previous month. That is significantly more than economists had expected. On average, they had only expected a slight decline of 0.5 percent. Orders had grown by 0.6 percent in October.
Year-on-year, November order intake fell 11.0 percent. “Incoming orders have thus reached their lowest level since July 2020,” the statistics office notes.
Foreign orders collapse
Domestic orders fell by a comparatively small 1.1 percent compared to the previous month, while those from abroad fell by 8.1 percent. While demand from the euro zone fell by 10.3 percent, new business with the rest of the world fell by 6.8 percent.
Orders for capital goods such as machines, vehicles and systems fell by 8.5 percent this time. The manufacturers of intermediate goods saw a decline of 0.9 percent. Orders for consumer goods fell by 0.7 percent.
Backlog is high
The development shows “that the industry is going through a difficult winter, even if the business expectations of the companies have recently improved,” commented the Federal Ministry of Economics. “However, the order backlog in the industry is still high, which supports production at the current edge.”
Analyst Ralph Solveen from Commerzbank sees it that way. He assumes that the drop 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 impact of high energy prices, production may therefore fall in the coming months, but a slump is unlikely,” Solveen said.
Will the bottlenecks dissolve?
On the other hand, Alexander Krüger, chief economist at Hauck Aufhäuser Lampe, is pessimistic: “The result is a shock. Caution and restraint seem to rule more strongly among clients. It is also worrying that the award of orders is now below the level of 2015. Declining material bottlenecks are only vague Hoping for better times.”
The sluggish global economy, lack of materials and the energy crisis are currently affecting the industry. However, complaints in the industry about missing materials decreased in December for the third month in a row, and significantly so: 50.7 percent of companies were still suffering from this, after 59.3 percent in November, as the Munich ifo Institute found out. “A resolution of the bottlenecks now seems to be emerging in many sectors,” said the head of the ifo surveys, Klaus Wohlrabe. “This will support the economy in the coming months.”
According to a study by the Institute for Macroeconomics and Business Cycle Research (IMK), the lack of products from abroad such as microchips, plastics and packaging have cost German industry dearly. From the beginning of 2021 to mid-2022, goods worth almost 64 billion euros could not be manufactured due to supply bottlenecks, according to the union-related institute.