German Factory Orders Fall Sharply In November

(RTTNews) - German factory orders declined notably in November due to the sharp decrease in orders for transport equipment, suggesting that the manufacturing sector remains deep in recession.

New orders registered a monthly fall of 5.4 percent in November, Destatis reported Wednesday.

The pace of decline deepened from 1.5 percent in October and was worse than economists' forecast of 0.3 percent drop. A similar pace of decline was last reported in August.

New orders declined primarily due to the sizeable fall in large-scale orders for other transport equipment which includes aircraft, ships, trains and military vehicles, the office said. Following a marked growth in October, orders for transport equipment plunged 58.4 percent on month in November.

When large-scale orders are excluded, new orders were 0.2 percent higher than in the previous month.

Further, new orders in the intermediate goods moved up 1.8 percent, while orders for consumer goods and capital goods declined 7.1 percent and 9.4 percent, respectively. Domestic orders advanced 3.8 percent. However, the gain was offset by the 10.8 percent decrease in foreign orders. Orders from the euro area fell 3.8 percent and orders from outside the euro area declined 14.8 percent.

On a yearly basis, industrial orders logged a 1.7 percent drop, in contrast to the 5.7 percent increase in October. Orders were expected to grow 1.9 percent.

Data showed a rebound in manufacturing turnover in November. Real turnover increased 1.4 percent month-on-month in November, reversing a revised 1.5 percent drop in October. On year, turnover was down 2.3 percent.

The recent Purchasing Managers' survey results showed that the German manufacturing sector continued to contract in December with sharp and accelerated declines in output and new orders. The HCOB manufacturing PMI fell to 42.5 from 43.0 in November.

Earlier today, Destatis said German retail sales increased in November as consumers brought forward their Christmas shopping to take advantage of special promotions during Black Friday.

Retailers achieved 2.5 percent more sales than in November 2023, better than the expected growth of 1.9 percent. However, sales fell 0.6 percent on a monthly basis, confounding expectations for a growth of 0.5 percent.

ING economist Carsten Brzeski said weak order books combined with still high inventories do not bode well for industrial production over the coming months.

The economist noted that the retail sales data suggest that the rebound in private consumption in the third quarter is unlikely to continue in the fourth quarter.

Macro data shows the weakness of the German economy in November and confirms the assessment of a light winter recession, Brzeski added.