The order situation in German industry continues to deteriorate. Fewer orders were received again in July, according to data from the Federal Statistical Office on Tuesday. Incoming orders fell by 1.1 percent compared to the previous month. It is the sixth decline in a row. Analysts had expected an average setback of 0.7 percent.
The Federal Ministry of Economics commented that demand was weak in view of the Ukraine war and the high gas prices. “For industrial companies, the outlook for the second half of the year remains subdued, which is also reflected in a cooled business climate and cautious export expectations.” Bank economists were similarly cautious.
In detail, 4.5 percent fewer orders came from Germany in July, while 1.3 percent more orders were received from abroad. Orders from countries outside the euro zone had a supportive effect. Broken down by product group, orders for consumer goods fell unusually sharply by almost 17 percent. However, capital goods such as machines were only ordered slightly less than in the previous month. Intermediate goods were 1.5 percent more in demand.
“No good prospects for the German economy”
DIHK economic expert Jupp Zenzen said that supply chain disruptions, rising energy prices and high inflation rates had put a damper on the global economy and had caused orders to fall from month to month since the beginning of the year. “Not only domestically is the demand for industrial and capital goods weakening, orders from the euro area are also declining. These are not good prospects for the export-oriented German economy.”
Commerzbank analyst Ralph Solveen put the importance of the data into perspective. The development of orders is currently of secondary importance, since the companies are already producing significantly less than in “normal” times. The decisive factor for this is, on the one hand, the sometimes considerable delivery bottlenecks in the global trade in goods. “On the other hand, in view of the massive increase in energy prices, many companies have recently shut down the production of some goods because they are no longer profitable.” According to Solveen, this effect is likely to gain in importance in the future.
