economists surprised
Significant slump in orders in industry
01/06/2023 11:11 am
There have not been so few incoming orders for German industry in November for more than a year. Orders fell by 5.3 percent. Economists had expected a much smaller decline. But one detail gives hope for the next few months.
In November, German industry suffered the sharpest slump in orders for more than a year due to the weakening global economy. The orders were 5.3 percent lower than in the previous month, as reported by the Federal Statistical Office. Economists polled by the Reuters news agency had only expected a decline of 0.5 percent, after growth of 0.6 percent in October.
Compared to November 2021, the calendar-adjusted level was 11.0 percent lower. “Incoming orders have thus reached their lowest level since July 2020,” according to the statistics office. A lack of major orders contributed to this. 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.”
In the short term, there is good news, said the chief economist at VP Bank, Thomas Gitzel: “The declining order intake is not an acute threat to the German economy.” Due to the high order backlog in large parts of the industry, production is secured for the current year, since uncompleted orders have been building up due to material shortages. “The declining incoming orders only cause real difficulties at the end of the year or at the beginning of 2024,” said Gitzel. “But then probably all the more clearly.”
Falling bottlenecks give hope
Domestic orders in November 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. Orders for consumer goods fell by 0.7 percent.
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.”