German industrial orders decline amid weak foreign demand

German industrial orders decline amid weak foreign demand
German industrial orders decline amid weak foreign demand

The fifth consecutive decline in factory orders and a fall in demand from abroad point to “subdued” industrial activity in the coming months.

The Federal German statistics office, Destatis, said Thursday that factory orders fell for a fifth consecutive month in May.

The data showed that German industrial orders dropped 1.6% month-on-month, sharper than the revised 0.6% decrease in April.

Although domestic orders rose slightly by 0.5%, the decline is largely attributed to a 2.8% fall in foreign demand, with orders from the non-eurozone falling by 4.6% and orders from the euro area decreasing by 0.1%.

Destatis recorded a 2.9% drop in orders in the automotive industry, and a sharp decline of 19.2% in the “manufacture of other transport equipment.”

What does it mean for the German economy?

The German Economy Ministry said the latest figures and a recent deterioration in business expectations point to “rather subdued” industrial activity in the coming months.

“Order intakes are only likely to stabilize once global trade recovers further and demand for industrial products gradually picks up,” it added.

Germany, Europe’s biggest economy and a traditional driver of European growth, has struggled to bounce back since Russia launched the war in Ukraine, driving prices up globally. 

The German economy shrank in 2023, partly due to a decline in the manufacturing sector. 

The German government forecasts growth of 0.3% this year, after sharply lowering its projection from 1.3%.

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