Reports of extreme unforeseen drop in German industrial demands

(MENAFN) Provisional data from Germany's federal statistics office, Destatis, has revealed an unexpected and sharp fall in new orders for the country's industrial goods in October. The figures, released on Wednesday, indicate a year-on-year decline of 7.3 percent in factory orders in manufacturing, with a significant 3.7 percent drop from the previous month. This stark decrease defies analysts' predictions, who had anticipated a 0.2 percent increase month-on-month.

Destatis attributes this unexpected slump primarily to the machinery and equipment sector, which experienced a substantial 13.5 percent decline in new orders from September. This sector had witnessed a notable 9.8 percent rise in new orders the previous month. The data further suggests a decline in demand across other major sectors, including fabricated metal products (except machinery and equipment), the manufacture of basic metals, electrical equipment, and automotive parts.

Notably, foreign orders bore the brunt of this downturn, falling by 7.6 percent month-on-month. In contrast, domestic orders experienced a modest rise of 2.4 percent. Sectors that reported an increase in new orders included aircraft, ship, and train equipment manufacturers, which saw a notable 20.2 percent jump, along with the consumer goods sector, reporting an increase of 2.8 percent.

These unexpected declines in industrial orders add to the challenges facing Germany's economy. With a 0.1 percent contraction in industrial output from July to September and economists forecasting another contraction in the current quarter, the European Union's economic powerhouse is at risk of slipping into a recession.

Commerzbank economist Ralph Solveen commented on the situation, noting that many companies have, so far, compensated for lower order intake by working off their order backlogs. However, he warned that in the long term, companies may have to reduce their production, hinting at a potential continued shrinkage of the German economy in the coming winter months.

This article delves into the intricacies of the unexpected fall in German industrial orders, analyzing the sectors contributing to the decline and the potential implications for the nation's economy, which is grappling with the broader challenges of an energy crisis and weak global demand.


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