Dampener for the German economy: industrial incoming orders fell surprisingly sharply in August

Setback for the German economy: Incoming orders in German industry fell surprisingly significantly in August. However, the double-digit month-on-month decline is due to the slump in major orders, including in the defense sector. Adjusted for the value of large orders, incoming orders were almost at the previous month's level. Experts such as Michael Herzum, Head of Economics at the fund company Union Investment, therefore do not see a turnaround in the recent positive picture in the industry.

Specifically, orders fell by 10.6 percent in August compared to the previous month, seasonally and calendar adjusted, as the Federal Statistical Office in Wiesbaden announced. Experts had only expected a decline of one percent. In July, incoming orders rose by a slightly upwardly revised 3.2 percent month-on-month. Compared to the same month last year, incoming orders increased by 2.7 percent in August.

The month-on-month slump is primarily due to significantly fewer large orders for military vehicles, aircraft, ships and trains. Without taking large orders into account, incoming orders in German industry were 0.1 percent lower in August than in July. Large orders had already distorted the picture in the previous months.

“Order situation has improved significantly since autumn 2025”

In a less volatile three-month comparison, incoming orders from June to August were 1.3 percent higher than in the previous three months. Without major orders, it fell by 2.6 percent. According to Union Investment expert Herzum, the data from August does little to change the overall picture for the sector. “The order situation in German industry has improved significantly since autumn 2025.”

“The order books are well filled and mathematically offer the industry a cushion of around nine months,” he wrote in an initial assessment. “The leading indicators also suggest that the recovery can continue to gain momentum.” But so far production is still lagging behind orders.

Economist: Good prospects - but no boom yet

“Many companies process additional orders with their existing capacities instead of expanding their production,” says Herzum. “Whether the full order books actually result in more growth will depend on the investments.” Companies still lack the confidence to ramp up production and capacities. "German industry has stabilized and the prospects are good - but it's not yet a boom."

VP Bank chief economist Thomas Gitzel sees it similarly: “There is a lack of new investment dynamics that would indicate a lasting economic upswing,” he wrote in his first analysis of incoming orders. “In the meantime, the high level of orders on hand has a reassuring effect. This should support industrial production at least in the coming months.”

Companies' current optimistic view of the future suggests that incoming orders may perhaps gain more ground in the coming months.