The fastest drop in industrial orders in Germany after the pandemic

Factory orders in Germany fell 11.7 percent, the biggest monthly drop since April 2020, when the Covid-19 epidemic peaked, despite expectations of a 4 percent drop in July due to to the weakening of the world economy after high inflation.

The German Federal Statistical Office (Destatis) has announced provisional data on factory orders for July.

Consequently, orders for domestically produced products in the country decreased by 11.1 percent in July compared to the previous month.

Factory orders in July posted the biggest monthly drop since the epidemic peaked in April 2020.

DOMESTIC ORDERS DECREASED BY 9.7 PERCENT

The market expectation for factory orders was a decline of 4 percent per month. In June 2023, the orders in question increased by 7.6 percent.

The Destatis statement highlights that the main reason for the sharp drop in factory orders in July was the large production orders registered in the aerospace industry in June.

Excluding large-scale orders, new orders rose 0.3 percent on-month in July, according to Destatis data. Orders fell in July in several industries, including computers, electrical equipment and metal products.

In the motor vehicle sector, new orders rose 2.7 percent on-month in July.

Orders from the euro zone fell 24.4 percent, while orders from the rest of the world fell 4.1 percent.

While rising interest rates and high energy prices in Germany dampened demand in the domestic economy, domestic orders fell 9.7 percent in July compared with the previous month.

In Germany, total domestic orders and foreign orders fell 9.7 percent and 12.9 percent monthly in July.

EFFECTIVE DECREASE IN BUSINESS PARTNERS

In the same period, new orders from the euro area fell 24.4 percent compared to June, while orders from other countries to Germany fell 4.1 percent.

In July, orders for manufacturers of intermediate goods fell 4.5 percent and orders for capital goods 15.9 percent on a month. By contrast, orders from consumer goods manufacturers fell 8.2 percent.

Thomas Gitzel, chief economist at VP Bank, said: “Germany is dependent on the global economy. The Chinese economy, Germany’s most important trading partner, is weakening. (AA)