German factory orders fell sharply in early 2024 after rising in December, signalling the difficulties Europe’s largest economy is facing in overcoming its recent slump.
Factory orders also fell 6 per cent year-on-year in January, according to data released Thursday by the federal statistics office Destatis. It said:
“The sharp decline in January 2024 is attributable to the high volume of large-scale orders in December 2023.”
In January 2024, the volume of large-scale orders was back to an average level, it added. Destatis also said:
“This base effect is particularly pronounced in the manufacture of electrical equipment (-33.2%), other transport equipment (in particular, aircraft, ships, trains; -27.3%) and fabricated metal products (-14.5%).”
In January 2024, new orders declined from the previous month in all three major groups, i.e. capital goods (-13.1 per cent), intermediate goods (-9.3 per cent) and consumer goods (-5.7 per cent). It noted:
“Foreign orders fell by 11.4%, with orders from the euro area declining by 25.7%. By contrast, orders from outside the euro area rose by 1.6%. Domestic orders declined by 11.2%.”
Last month, Germany cut its economic growth forecast for this year to just 0.2 per cent, far less than the 1.3 per cent it predicted a few months ago.
The Bundesbank warned that output could contract in January-March after falling 0.3 per cent in the final three months of 2023. However, it insists a serious downturn is unlikely. Ralph Solveen, an economist at Commerzbank, said:
“The downward trend that has been observed for two years continued in January. This suggests that industrial production will continue to fall in the coming months and thus contribute to the German economy shrinking again in the first quarter.”
