The downturn in German industry has intensified, after orders in the country’s manufacturing heartlands fell for a second consecutive month in December, defying predictions of a rebound and making 2019 order books the worst for over a decade.
New German manufacturing orders fell by 2.1 per cent in December from the previous month, according to provisional figures published by the Federal Statistics Office on Wednesday. Economists polled by Reuters had expected an increase of 0.6 per cent.
The two-year downturn in German manufacturing has weighed on overall eurozone growth, although it has been partially offset by resilient consumer spending. While recent survey data have fuelled hopes that the industrial decline is stabilising, the outbreak of the coronavirus in China has raised concerns about the likely disruption to global manufacturing supply chains.
Christine Lagarde, president of the European Central Bank, said this week that the outbreak added “another layer of uncertainty” to the economy and it was monitoring its impact closely.
Overall, German industrial orders fell by 8.7 per cent last year. Carsten Brzeski, an economist at ING, said the “industrial horror show continues”. He added: “Despite some tentative positive signs from soft data that point to a bottoming out of the manufacturing slump, the hard reality looks completely different.”
Domestic orders for German manufacturers increased by 1.4 per cent, but foreign orders fell by 4.5 per cent. Orders fell sharply for capital goods and consumer goods, while increasing for intermediate goods.
Germany’s export-focused economy has been knocked by the US-China trade war, uncertainty over Brexit and a sharp decline in the car industry, which is grappling with new emissions rules and a shift to electric vehicles. Exports from the country’s automotive sector, which employs almost 3m people directly and indirectly, fell by 13 per cent last year. Europe’s largest economy grew by 0.6 per cent last year — its weakest performance for six years.
The statistics agency revised up the industrial order figures for November from a decline of 1.3 per cent to a decline of 0.8 per cent — but that still meant overall order books shrank at German manufacturers in eight out of 12 months last year.
Source: Economy - ft.com
