German ‘misery continues’ as industrial orders fall unexpectedly

Berlin: German industrial orders fell unexpectedly in November on weak foreign demand and a lack of major contracts, data showed on Wednesday, suggesting that a manufacturing slump will continue to hamper overall growth in Europe’s largest economy.

Germany’s export-dependent manufacturers are struggling with sluggish demand from abroad as well as business uncertainty linked to trade disputes and Britain’s decision to leave the European Union.

“The misery in manufacturing continues,” VP Bank economist Thomas Gitzel said, noting that the military escalation between the United States and Iran was now posing an additional risk for businesses.

Contracts for ‘Made in Germany’ goods decreased by 1.3 per cent from the previous month, posting the steepest drop since July, data from the Economy Ministry showed. That confounded the Reuters consensus forecast for a 0.3 per cent rise.

Demand from other countries fell 3.1 per cent, the biggest drop since February, whereas orders from domestic clients rose 1.6 per cent.

The reading for October was revised up to a rise of 0.2 per cent from a previously reported fall of 0.4 per cent.

Without bulk orders, industrial orders rose 1.0 per cent in November, the economy ministry said, adding that the sector’s incoming orders had stabilised at a low level in recent months.

“At the same time, business expectations in manufacturing have brightened somewhat. So the outlook for industrial activity has improved a bit,” the ministry said.

German business morale hit a six-month high in December, a survey by the Ifo institute showed last month, suggesting that the German economy picked up in the fourth quarter despite the manufacturing crisis.

The German economy probably grew 0.5 per cent in 2019, down from 1.5 per cent in 2018. The statistics office releases preliminary gross domestic product growth data on Jan. 15.

For 2020, the government forecasts 1.0 per cent growth, helped by a higher number of working days. On a calendar-adjusted basis, Berlin predicts 0.6 per cent growth this year.