Status: 06.12.2021 11:20 a.m.
In October, orders from German industry collapsed for the second time within three months. Above all, there are no major orders from abroad. Experts point out the risks to the global economy.
German industry received considerably fewer orders in October. The Federal Statistical Office announced that 6.9 percent fewer orders were received than in September. Industry experts had expected a slight decrease of 0.3 percent, but they were completely surprised by the severity of the setback. Compared to the same month last year, orders decreased by 1.0 percent.
The reason for the unexpectedly weak data is the lack of orders from abroad. While domestic orders even increased by 3.4 percent, 13.1 percent fewer orders were received from abroad than in the previous month. In particular, fewer orders came from countries outside the euro zone, falling by 18.1 percent. According to the Federal Statistical Office, the decline is primarily due to large orders, which had risen sharply by 15.7 percent in the previous month.
After incoming orders climbed to a record high in mid-2021, “the second sharp decline in incoming orders within the last three months” means “a further damper” for the economic outlook, according to the Federal Ministry of Economics.
However, given the current high volatility of the index and its components, the development should not be overinterpreted, it said. If major orders are not taken into account, incoming orders only fell by 1.8 percent, as reported by the Federal Statistical Office.
In August, too, incoming orders were significantly lower than in the previous month. Especially in the automotive and metal industries, the manufacturers complained about delivery bottlenecks for preliminary products.
Economic warning shot
“This is a warning shot against the bow of the economy,” commented LBBW economist Jens-Oliver Niklasch on the current data. “The decline in orders is brutal,” said VP Bank’s chief economist, Thomas Gitzel. “The infection process in Asia is now making itself felt.” This is likely to primarily hide the situation in China. “New lockdowns in Asia are slowing down the industry in this country,” said Gitzel. “The current virus wave is thus a renewed burden on the world economy.”
Holger Schmieding, chief economist at Berenberg Bank, suspects the persistent delivery problems as the reason: “If things cannot be produced or delivered quickly enough, fewer orders are received. The underlying demand remains strong, as surveys suggest.”
The industry’s order books are still full. However, production is jammed due to bottlenecks in raw materials and materials such as microchips. This is one of the reasons why the upswing in the coming year will be weaker than originally thought, according to the German government’s forecast. It lowered its growth forecast to 2.6 percent from 3.5 percent previously. In 2022, the economy will increase by 4.1 percent, and by 1.6 percent in 2023.