German economy
German factory orders unexpectedly rose sharply in December, the German Federal Statistical Office reports. The reason is an ‘extremely’ high number of aircraft orders, which may distort the picture, economists warn.
This is the largest increase since 2020: the number of orders increased by 8.9 percent compared to the previous month. That is unexpected, analysts had previously estimated that the situation would remain flat.
The driving force behind the increase are aircraft orders, which pushed the ‘other vehicle construction’ category up by 110.9 percent in one month. Large orders for the production of metal products (+ 18 percent) and electronic equipment (+ 38.7 percent) also positively influence the overall result.
No improvement in sight
The lack of orders is increasingly becoming a burden on the German economy, the Ifo Institute for Economic Research said on Monday. Economists warn that the current data does not change that. The unusually high number of large orders will have little effect on output in the short term, said Ralph Solveen, senior economist at Commerzbank. If you ignore that, order volume even fell by 2.2 percent. “This once again shows that there is no improvement in sight for the German economy,” said Solveen.
For example, incoming orders fell for important parts of the automotive industry (minus 14.7 percent), mechanical engineering (minus 5.3 percent) and the chemical industry (minus 3.7 percent). Viewed over a less volatile three-month period, factory orders were 0.1 percent higher between October and December 2023 than in the previous three months.(rtr)
