The two-year recession in Germany’s industrial heartlands is deepening after orders in the country’s core manufacturing sector fell more than expected in November — defying expectations of a rebound.
New German manufacturing orders fell by 1.3 per cent in November, compared with the previous month, according to provisional figures published by the Federal Statistics Office on Wednesday. Economists polled by Reuters had expected an increase of 0.2 per cent.
The bad news was slightly mitigated as the statistics office published revised figures for October showing that manufacturing orders rose 0.2 per cent in that month, compared to its earlier estimate for a fall of 0.4 per cent.
The November fall was mainly due to a sharp drop in bulk orders. Excluding bulk orders, November orders rose by 1 per cent from the previous month.
Domestic manufacturing orders reversed their earlier falls by increasing 1.6 per cent in November, but this was more than offset by a 3.1 per cent fall in foreign orders with the heaviest decline coming in orders from other euro countries. Overall, German industrial orders fell 6.5 per cent in the year to November.
Carsten Brzeski, economist at ING, said German industrial orders had fallen by a monthly average of 0.6 per cent this year, down from monthly declines of 0.4 per cent last year.
The last time the country suffered two consecutive years of negative industrial order growth was in 2001 and 2002. “All in all, there are still no signs at all of a bottoming out for German industry,” said Mr Brzeski. “Instead, the freefall continues.”
The downturn in German manufacturing has weighed on overall eurozone growth, while being offset by resilient consumer spending. But there have been faint signs of stabilisation recently with German inflation rising faster than expected and exports rising.
Germany’s export-focused economy has been hit by the US-China trade war, uncertainty over Brexit and a sharp decline in the car industry, which has been disrupted by new emissions rules and the shift to electric vehicles.
Europe’s largest economy grew 0.1 per cent in the three months to September, narrowly avoiding a recession as higher household and government spending and a rebound in exports helped to offset a decline in industrial production.
Fourth-quarter figures for the German economy are due to be published next Wednesday and are expected to show meagre growth of 0.1 per cent. The weaker manufacturing order books raise doubts about an expected rebound in industrial production for November, when those figures are published this Thursday.
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January 08, 2020 at 02:48PM
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