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Germany sees unexpected leap in factory orders

February 6, 2024

German manufacturers have reported a healthy surge in factory orders. The data is welcome news after a slowdown in manufacturing for Europe's largest economy.

A worker at a Mercedes-Benz factory in Berlin
Despite the uptick, demand for motor vehicles and chemical products declinedImage: Jürgen Heinrich/imago images

Germany's manufacturing sector reported an unexpected jump in demand for December, according to official data on Tuesday.

The news gives hope that a slowdown in manufacturing for the country might be coming to an end.

What the figures show

New orders — an indicator of future economic health — jumped 8.9% month-on-month, federal statistics office Destatis said.

The figure is significant given that demand in November had stagnated when analysts had expected it to increase.

Destatis said the surprise rebound was driven by a few big-ticket items, with the production of vehicles other than cars — including planes and trains — seeing a 110% leap in orders.

There was also strong growth in electrical equipment manufacturing, as well as metal products and pharmaceuticals. 

However, orders for motor vehicles and chemical products declined.

ING bank economist Carsten Brzeski said the rise in orders "gives hope that the downward trend in German industry is finally bottoming out."

"Many more of these positive data releases" will be needed, however, "to signal any significant rebound of the economy", he added.

Is Germany's economic model doomed?

In 2023 as a whole, new orders were down 5.9% compared with the previous year.

High inflation and a rise in energy prices, along with weaker demand from key market China, have all weighed heavily on German manufacturing in recent months.

The industrial slowdown exacerbated a grim time for the German economy, which shrank by 0.3% percent in 2023.

rc/kb (AFP, dpa)

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