October saw an unexpected drop-off in German industrial orders, with demand at home and abroad lessening as the end of 2019 approaches.
According to the Statistisches Bundesamt, Germany’s Federal Statistics Office, contracts for German-manufactured goods fell 0.4 per on the previous month. Analysts polled by Reuters had previously predicted a fall of 0.3 per cent.
The economic powerhouse of Europe narrowly missed entering a technical recession this year and hoped that September’s increase in goods contracts of 1.5 per cent would herald in a period of more stabilised growth.
These latest statistics will somewhat dash such hopes. Industrial demand from domestic clients fell 3.2 per cent in October while orders from outside the eurozone fell 4.1 per cent. The data showed that demand for consumer and intermediate goods actually strengthened, but that orders for capital goods such as equipment and machines fell.
Notwithstanding these disheartening figures, the German Economy Ministry has sought to emphasise the signs of hope and has argued that demand has stabilised in recent months. Industrial orders, for example, from other eurozone nations increased by 11.1 per cent, helped by bulk orders.
Nonetheless the Ministry had to admit that: “Activity in the manufacturing industry is still weak. The manufacturing outlook for the final quarter therefore remains subdued.” Excluding bulk orders, overall industrial demand fell 1.4 per cent in October.
The cause of this sluggishness is multi-faceted; the export-heavy German economy has struggled in the light of the US-China trade wars and consequent tariffs, and has also been affected by the prolonged uncertainty caused by Britain’s exit from the European Union.
The all-important German car industry has struggled to adapt to the stricter regulations introduced in the wake of the “dieselgate” emissions scandal and the wider shift towards electric vehicles.
VDA, the German car industry body, admitted that car sales are expected to remain weak into 2020 with further job cuts likely.