German factory orders unexpectedly advanced at year end
GERMAN factory orders unexpectedly rose – signalling a small rebound as Europe’s largest economy grapples with an industrial downturn.
Data released on Tuesday (Feb 6) showed a 8.9 per cent increase in demand in December from the previous month. That jump -defying a median economist estimate of a 0.2 per cent decline – was thanks to major orders, without which there would have been a 2.2 per cent drop, Destatis said.
A less volatile three-month reading for the final quarter of the year showed an 0.1 per cent uptick from the previous period. For 2023 as a whole, factory orders declined 5.9 per cent.
The outcome offers some hope as Germany’s struggles to bounce back from an industrial slump caused by the energy crisis and weak global demand. Gross domestic product contracted by 0.3 per cent in the final quarter of last year, and while the country dodged a recession, the outlook is bleak.
The Bundesbank expects output to “stagnate at best” in the first three months of 2024, citing a continued decline in foreign orders and cautious consumers. The Ifo institute’s sentiment index also signalled that an upturn is still a long way off.
Data on inflation and employment were more positive. Consumer-price growth slowed more than expected in January, to 3.1 per cent, and a drop in joblessness underscored labour-market resilience.
But while parliament passed a bill settling a budget dispute for 2024, next year’s finance plan is still outstanding. Elsewhere, there’s protracted chaos from striking airport staff and protesting farmers.
Speaking at a Bloomberg event in Frankfurt on Monday, German Finance Minister Christian Lindner said that his country is suffering because of its failure to boost output.
“We are no longer competitive,” he said. “We are getting poorer because we have no growth. We are falling behind.” BLOOMBERG
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