HomeEconomic IndicatorSurprise increase in German industrial orders in December, defying expectations.

Surprise increase in German industrial orders in December, defying expectations.

German Industrial Orders Unexpectedly Surge in December

German industrial orders soared in December

German industrial orders unexpectedly surged in December, marking the highest month-on-month increase in over three years, driven by an unusually high number of aircraft orders, according to the federal statistics office. The surge, which saw orders rise by 8.9% on a seasonally and calendar adjusted basis, defied expectations of a flat outcome in a Reuters poll of analysts. The unexpected jump was primarily fueled by a significant increase in orders for aircraft and other vehicles, such as ships and trains, which saw a remarkable 110.9% rise in orders.

Positive impact on various sectors

The surge in orders also had a positive impact on the manufacture of metal products and electrical equipment, with an 18.0% and 38.7% increase in orders, respectively. However, the lack of orders in manufacturing continues to pose a burden on the German economy, as warned by the Ifo Institute. Economists cautioned that the data did not indicate a turnaround for the German economy, as the unusually high number of big ticket orders would have limited short-term effects on production. In fact, excluding these orders, the volume of orders actually saw a 2.2% decrease.

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Challenges in specific industries

While the surge in orders was positive overall, it also highlighted challenges in specific industries, with incoming orders falling in the automotive industry (-14.7%), mechanical engineering (-5.3%), and the chemical industry (-3.7%). The statistics office also revealed that industrial orders for the entire year of 2023 fell by 5.9% compared to the previous year.

Domestic and foreign orders

In December, domestic orders rose by 9.4% on the month, while foreign orders rose by 8.5%. Orders from the euro zone increased by 34.5%, while orders from outside the euro zone fell by 7.5%. The data for the three-month period from October to December 2023 indicated a 0.1% increase in industrial orders compared to the previous three months.

Overall impact

The unexpected surge in German industrial orders in December marks a significant milestone, despite the challenges faced by specific industries. While the data may not indicate an immediate turnaround for the German economy, it provides valuable insights into the complex dynamics of industrial orders and their impact on various sectors.

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