German Factory Order Decline Exceeds Expectations

Germany's factory orders declined more than expected in December largely due to weak demand from euro area amid strict lockdown restrictions, official data from Destatis revealed Friday.

Orders were down 1.9 percent on month, reversing a 2.7 percent rise in November, Destatis reported. This was bigger than the economists' forecast of -1 percent and marked the first drop since April 2020.

Domestic orders dropped moderately by 0.9 percent. Meanwhile, foreign orders declined 2.6 percent due to a 7.5 percent fall in demand from the euro area. Orders from other countries grew 0.5 percent.

Manufacturers of intermediate goods reported a monthly increase of 0.8 percent. Orders for consumer goods advanced 6.4 percent. On the other hand, orders for capital goods dropped 4.6 percent on the previous month.

New orders decreased due to the tightened lockdown but it exceeded the level before the outbreak of the pandemic in the fourth quarter of 2019 by almost 5 percent, the economy ministry said.

Excluding major orders, real new orders in manufacturing were 2.0 percent lower than in the previous month.

On a yearly basis, industrial orders growth eased to 6.4 percent in December from 6.7 percent in the previous month.

Today's data showed that the stricter lockdown measures since mid-December, as well as the Christmas break, have finally hit German industry, Carsten Brzeski, an ING economist, said.

At face value, this only looks like a temporary breather, the economist noted. However, with the Chinese New Year break as well as ongoing lockdowns in many main trading partner countries, setbacks for industry seem hard to avoid.

Real turnover in manufacturing advanced 1.9 percent month-on-month in December after rising 1.1 percent in November.