“remains a problem child”
Industry with biggest drop in orders since 2020
09/06/2023 1:53 p.m
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German industry collects significantly fewer orders in July. According to an economist, Germany is dependent on the global economy. And the lame one. However, the order volume is also distorted by large orders in the previous month.
At the beginning of the second half of the year, orders in German industry dropped more than they had in more than three years. According to the Federal Statistical Office, new business fell by 11.7 percent in July compared to the previous month. The last time the corona crisis began in April 2020, there was a sharper decline. Economists had only expected a drop of four percent. In June and May there was still strong growth, which was mainly due to large orders – most recently from the aerospace industry in particular. This time they were gone.
“The picture is not as bleak as it appears at first glance,” said Union Investment’s chief economist, Jörg Zeuner. “In the previous month, numerous large orders, including one for around 900 aircraft for the manufacturer Airbus, caused the pendulum to swing upwards.” As a result, new business in so-called other vehicle construction fell by 54.5 percent this time.
Adjusted for such large orders, orders actually increased in July, albeit only by 0.3 percent. In a three-month comparison, which fluctuated less strongly, incoming orders from May to July were 3.1 percent higher than from February to April. “In view of the gloomy business climate and the weak global economy, however, a sustained revival of industrial activity cannot be derived from this,” explained the Federal Ministry of Economics. The chief economist at Hauck Aufhäuser Lampe Privatbank, Alexander Krüger, added: “The industry remains a problem child, the order books are significantly thinner than a year ago”.
On the drip of the global economy
Domestic orders in July were down 9.7 percent from the previous month. Rising interest rates and high energy prices are currently dampening demand in the domestic economy. Foreign demand even fell by 12.9 percent, and that from the euro zone by 4.1 percent. “Germany is dependent on the global economy,” said the chief economist at VP Bank, Thomas Gitzel. “The latter is currently not in good shape.” For example, China, Germany’s most important trading partner, is weakening.
In July, orders fell in the areas of IT and optical equipment, down 23.6 percent, electrical equipment, down 16.7 percent, and mechanical engineering, down 8.7 percent. On the other hand, incoming orders increased slightly in the areas of motor vehicles and motor vehicle parts, chemical and metal production.
Real sales in the manufacturing sector in July were 1.0 percent lower than in the previous month. In June there was a decline of 1.4 percent. “German industry is therefore still a growth driver,” said chief economist Zeuner, summarizing the new economic data.