2024-10-07 15:21:54
German industry‘s order business experienced a significant slump in August. Experts see clear signals of crisis from the economy.
German industry’s order business has collapsed, exacerbating the crisis in the economic sector. After two increases in a row, orders fell by 5.8 percent in August compared to the previous month, the most since January, as the Federal Statistical Office announced on Monday.
Experts had expected a setback in incoming orders after increases in June and July. However, on average they had only assumed a decline of 2.0 percent month-on-month.
The Federal Office explained the decline, among other things, with the orders in “other vehicle construction”. This includes the production of aircraft, ships, trains or military vehicles. The negative development was due to the fact that extensive major orders had been placed in the previous month, the statement said. There were also fewer orders from abroad in August.
Commerzbank chief economist Jörg Krämer described the data as a bitter disappointment. All in all, he expects gross domestic product to at best stagnate in the second half of the year. “There is no sign of the longed-for economic recovery anywhere,” explained the Federal Ministry of Economics. Growth rates of more than one percent, as the federal government expects for 2025, are unrealistic based on current data.
The drop in orders underlines the difficult situation in the industry and is a clear signal of crisis, said the scientific director of the union-affiliated IMK Institute, Sebastian Dullien. “The three main key areas of German industry are all massively affected by the weak phase: automobile manufacturing, mechanical engineering and chemistry.” The gross domestic product is therefore expected to stagnate and increase by 0.7 percent next year. “The current worsening situation in the industry represents a downside risk for this already not optimistic forecast.”
Domestic orders fell by 10.9 percent in August. Those from abroad fell by 2.2 percent. New business with euro countries fell sharply by 10.5 percent, while that with the rest of the world increased by 3.4 percent.