Slump in orders in German industry in August
The loss of major defense orders has resulted in the sharpest decline since the beginning of the year
Quick Look
- German industry recorded an unexpected drop in orders of 10.6 percent in August compared to the previous month.
- The main reason is the loss of large armaments and vehicle construction orders.
AI-generated summary
Why It Matters
After three increases in a row, incoming orders fell significantly in August. There was still a high volume of large orders in July.
Berlin. The loss of major defense orders caused German industry to experience an unexpectedly severe drop in orders in August.
New business shrank by 10.6 percent compared to the previous month, the most since the beginning of the year, as the Federal Statistical Office announced on Tuesday.
Economists polled by the Reuters news agency had only expected a decline of 1.0 percent, after three increases in a row.
The negative development is almost entirely due to the sharp decline in the “other vehicle construction” sector, which includes aircraft, ships, trains and military vehicles.
Order intake in this area fell by 61.5 percent compared to the previous month.
In July it more than doubled (revised +129.4 percent) due to an exceptionally high volume of large orders in ship, rail vehicle and aircraft construction.
The federal government is currently investing billions in modernizing the Bundeswehr.
“Even if the significant decline is primarily due to a low volume of defense orders, the order intake may not be particularly convincing,” said VP Bank chief economist Thomas Gitzel.
“There is a lack of new investment momentum that would indicate a lasting economic recovery.”
Open Questions
- How are the order numbers developing in September?
- Will investment momentum remain weak in the long term?
