Germany: Drop in factory orders – ABN AMRO

Aline Schuiling, senior economist at ABN AMRO, notes that orders received by Germany’s industrial companies fell by 1.3% mom in November, erasing the two successive rises that were recorded in September and October.

Key Quotes

“The weakness in orders in the three months to November has been concentrated in foreign orders from outside the eurozone, which fell by 3.4% 3m-o-3m in November. Of these, orders for German capital goods dropped by 6% 3m-o-3m and orders for consumer goods fell by 1.2%.”

“In contrast, foreign orders from other eurozone member states were strong in the three months up to November (6.8% 3m-o-3m), which was largely due to a monthly jump in (big-ticket) capital goods orders in October. Orders for consumer goods from eurozone member states declined by 1.2% 3m-o-3m in November.”

“Finally, domestic orders received by German manufacturers also were weak (-0.9% 3m-o-3m). All in all, the orders data suggest that the contraction in Germany’s industry has continued in the final quarter of 2019, although at a more modest pace than in Q2 and Q3 of that year. Such a decline in production would also be in line with changes in the manufacturing PMI and the Ifo business climate in manufacturing, which both pick up somewhat in the final months of 2019 but stayed at levels consistent with falling production.”

“Looking further ahead, we expect that the weakness in Germany’s industrial sector will persist moving into 2020, but that we will see a modest (not v-shaped) recovery in production in the course of the year when global trade is expected to regain some strength.”