Brussels (Brussels Morning) German Federal Statistical Office (Destatis) records show that industrial orders dropped more than expected in October due to low foreign demand. This further lowers the growth outlook for German manufacturers, especially coupled with global supply chain disruptions and bottlenecks, Reuters reports.
The global semiconductor shortage and resulting shortages of electronic components has hit the German automobile industry and other sectors of the economy.
Seasonally adjusted records show a 6.9% decline in orders for locally produced goods compared to September, with Destatis reminding that a monthly growth rate of 1.8% in September followed a decline of 8.8% in August.
Analysts who took part in the Reuters’ poll predicted a decline of industrial orders of 0.5% in October.
The Federal Ministry for Economic Affairs and Energy noted that “after incoming orders climbed to an all-time high in mid-2021, the index has lost more than 16 points in recent months”, adding that economic outlook is clouded by the second steep decline in the last three months.
Chinese orders down
Destatis noted that foreign orders dropped more than 13% on a monthly basis, pointing out that the decline of orders from China, Germany’s largest trading partner, was especially sharp. On the other hand, orders from German clients went up 3.4% on a monthly basis.
VP Bank chief economist Thomas Gitzel pointed out that “new lockdowns in Asia are slowing industry in Germany“, noting that the new wave of infections, which is hitting Europe especially hard, is exerting pressure on the global economy.
He believed that domestic demand would remain strong, pointing out that the new government is committed to increasing investments in the green transition.
“The decarbonisation of the economy requires major investments in new technologies”, he observed, adding that “German industry can and will benefit from this.”
Analysts noted that the higher than expected decline in industrial orders will stifle economic recovery in the coming months, predicting that it will result in economic stagnation at best in Q4.