German factory orders rebounded in January, indicating that a two-year downturn in the country’s sprawling manufacturing sector was ending just as it was about to be hit by disruption from the impact of coronavirus.
The biggest rise in German industrial orders for more than five years was led by a sharp recovery in foreign demand, particularly from other eurozone countries. Overall, German factory orders rose by a calendar-adjusted 5.5 per cent from December to January.
However, the good news was tempered by fears that the spread of coronavirus from China to more than 80 countries, including many in Europe, is likely to disrupt supply chains, deliveries, staffing and production at many German manufacturers.
“This small good news is likely only a small interlude ahead of the corona disruptions looming in March/April,” said Oliver Rakau, chief German economist at Oxford Economics.
Katharina Utermöhl, economist at Allianz, said the rebound in German factory orders “will be filed under ‘what could have been‘” and predicted that coronavirus disruption would “spoil the recovery party” in the first half of this year.
Trade tensions, Brexit uncertainty and disruption in the carmaking sector had already caused two years of declining German factory orders and last year was the worst for over a decade as order books of German manufacturers shrank 8.7 per cent.
But in January, even excluding major orders, German manufacturers enjoyed a 2.3 per cent surge in demand, which the federal statistics agency said “was due to a good general order situation in many economic branches”. Turnover in manufacturing rose 2 per cent in January.
