Strong start to the new year: a surprising number of industrial orders

Status: 07.03.2023 10:25 a.m

German industry started the new year with an unexpected increase in orders. Above all, orders from abroad increased surprisingly significantly at the beginning of the year.

German industry reported surprisingly positive figures at the beginning of the year. In January, incoming orders rose by 1.0 percent compared to the previous month, as the Federal Statistical Office announced on Tuesday. On the other hand, analysts had expected a decline of 0.7 percent on average. The already strong increase in orders in December was subsequently increased from 3.2 to 3.4 percent.

Without taking large orders into account, the order intake in January even increased by 2.9 percent compared to the previous month, as reported by the statistical office.

Foreign orders are increasing, domestic business is weakening

The increase in foreign orders had a particularly positive impact. These climbed by 5.5 percent in January, orders from outside the euro zone even rose by more than eleven percent. However, the situation in the domestic market is still difficult. Domestic sales fell 5.3 percent in January after a similar increase in the previous month.

“The high growth from abroad is likely to have something to do with the China reopening after the end of the zero Covid policy in China,” said LBBW economist Jens-Oliver Niklasch. However, the weak domestic data showed that the economic weakness in Germany itself was continuing.

Different industries are affected differently

According to statistics, the order increase in the automotive and supplier industry was 6.7 percent, while in mechanical engineering, on the other hand, orders fell by 3.9 percent. Orders also fell significantly in the metal products and chemical products sectors.

Experts speak of stabilizing the order situation

All in all, orders were still 10.9 percent below the previous year’s level. Nevertheless, experts are confident: “All in all, the emerging stabilization of the order situation in the manufacturing sector speaks for a mild course of the current economic weakness,” said the Federal Ministry of Economics.

Commerzbank chief economist Jörg Krämer emphasized that incoming orders still had a certain downward trend. The development indicates that industrial production will be subdued in the coming months but will not decline dramatically.

Outlook: Germany is threatened by a technical recession

The German economy had shrunk by 0.4 percent at the end of 2022 and has one foot in the recession. According to a rule of thumb, if the gross domestic product also shrinks in the current quarter, Germany would be in a technical recession. “For the gross domestic product I expect a further minus of 0.5 percent for this year,” says Krämer.

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