Sharp drop in factory orders in Germany

Factory orders in Germany fell 5.8 percent in November 2022, the biggest drop in a year, despite an expected 0.5 percent drop due to a weakening global economy.

According to provisional data announced by the German Federal Statistical Office (Destatis), orders for domestically produced products decreased by 5.3 percent in November compared to the previous month.

This decline was recorded as the steepest decline in nearly a year.

Destatis stated that factory orders in November were at their lowest level since July 2020.

Orders decreased 11 percent compared to November 2021. The market expectation for factory orders was for a monthly decline of 0.5 percent. The decline in orders was mainly due to the sharp drop in foreign orders.

ORDERS FROM OTHER COUNTRIES DECREASED 6.8 PERCENT

In Germany, total domestic orders for November fell 1.1 percent and foreign orders 8.1 percent on a monthly basis. In the said period, new orders from the Euro Zone fell 10.3 percent compared to October, and orders from other countries to Germany fell 6.8 percent.

Domestically, orders for intermediate goods manufacturers declined 0.9 percent, orders for consumer goods manufacturers declined 0.7 percent and capital goods orders 8.5 percent on a monthly basis. in November.

Factory orders, which increased 0.8 percent in October 2022 compared to the previous month, were revised by 0.6 percent.

In the statement of the German Ministry of Economy and Climate Protection, it was noted that the downward trend observed in November since February last year continued after the short-term stability (0.6 percent increase) in October.

‘THE INDUSTRY IS GOING THROUGH A DIFFICULT WINTER’

“Demand in the manufacturing sector in November 2022 was strongly affected by the absence of large orders in the automotive sector,” the ministry said in a statement. However, current orders in the industry remain high, currently supporting production. However, the new order data shows that the industry is having a difficult winter, despite the fact that business prospects for companies have recently improved.

Meanwhile, Germany’s manufacturing sector has been struggling with declining orders in recent months amid weakening demand amid the global economic slowdown.
Although the threat of gas shortages in the industry has diminished considerably due to the war between Russia and Ukraine, high energy costs, high inflation and uncertain economic prospects are creating headwinds for the industry.

Declining order intake does not pose a serious threat to the German economy as unfinished orders are piling up for now due to material shortages, experts say, adding that the reduction in new orders will only cause real difficulties. at the end of the year or beginning of 2024. . (AA)