Germany factory orders decline sharply in November, signaling heightened concerns about a potential winter recession. The significant drop highlights the ongoing economic challenges facing the country.
Significant Decline in Orders
Germany factory orders declined by 5.4% between October and November, amounting to a loss of over €50 million. This marked the steepest drop since August 2024, following a smaller 1.5% decrease in October.
The decline was driven by a 58.4% plunge in orders for aircraft, trains, and ships, reversing strong demand in October. Foreign orders also weakened significantly, with demand outside the eurozone particularly soft. Orders within the eurozone dropped by 3.8%. Basic metals and pharmaceuticals saw declines of 1.2% and 7.2%, respectively, while consumer and capital goods output also weakened.
Some sectors showed resilience: chemical sector orders increased by 1.7%, and machinery saw a 1.2% gain. Domestic demand provided a glimmer of hope, rising by 3.8%. Despite the monthly challenges, factory orders from September to November were 1.7% higher than the previous three months
Risk of Recession Intensifies
Germany’s economy continues to face weak consumer sentiment and dampened demand, raising the likelihood of a winter recession. The next GDP figures, due on January 15, will play a critical role in confirming this trend.
Retail sales data further highlight the risks: November’s retail sales fell 0.6% from the previous month, following a 0.4% drop in October. This missed analyst expectations of 0.5% growth. Non-food retail sales declined by 1.8%, while mail order and e-commerce dropped 1.2%. Food sector sales, however, edged up by 0.1%. Year-on-year, retail sales rose 2.5%, slightly better than October’s 2.4% and ahead of market forecasts of 1.9%.
Outlook Remains Bleak
Carsten Brzeski, an ING economist, remarked:
“There is no sign of a turnaround for German industry. At best, we’re seeing it bottom out.”
He further noted that disappointing retail sales suggest private consumption will not sustain the third-quarter rebound into the fourth quarter. Without a strong boost from Christmas shopping, inflation and political uncertainty are expected to dampen any recovery in consumer demand.
Germany faces a tough winter, with key indicators pointing to continued economic struggles.