German factories recorded the sharpest drop in new orders in seven months in August, further evidence of a worrying slowdown in Europe’s largest manufacturing sector, POLITICO reports.
Destatis, the national statistics agency, said on Monday that incoming orders fell 5.8 per cent in August, down 3.9 per cent from a year earlier. Analysts had expected a 1.9 per cent decline.
The lacklustre result was partly due to a string of large orders in categories such as aircraft, trains and military vehicles a month earlier, the agency said. Excluding them, orders fell just 3.4 per cent.
One positive was that July’s growth was revised upward to 3.9 per cent from an initial 2.9 per cent.
A combination of high energy prices and increased competition from foreign manufacturers, mainly China, has put pressure on the country’s manufacturing sector. The S&P Global Purchasing Managers’ Industry Index has been in negative territory for more than two years.
The slowdown has been particularly acute in the automotive sector. Separate data released on Monday showed car sales declining at an annualised rate of 4.7 per cent in the half to 2024.
EU capitals voted on Friday to impose tariffs on Chinese-made electric cars in an attempt to counter Chinese subsidies and protect their own lagging industries. Germany, for which China is one of its biggest export destinations, voted against.
The high share of manufacturing in Germany’s total output means its economy is likely to contract for a second straight year this year. A joint report by five of the country’s leading think tanks suggests it will shrink by 0.1% in 2024 before returning to growth in the next two years.
