Germany’s Factory Orders Drop Sharply in November

Germany’s factory orders fell by 5.4% month-on-month in November 2024, marking a sharper decline than October’s 1.5% drop and falling well below market expectations of no change. This was the steepest contraction since August, driven by a massive 58.4% plunge in orders for aircraft, ships, and trains, following a surge in large-scale orders during October.

Mixed Performance Across Sectors

The overall decline reflected weaknesses in key industries. Orders for pharmaceuticals dropped by 7.2%, while demand for basic metals fell slightly by 1.2%. However, some sectors showed resilience, with orders increasing for the chemical industry (1.7%) and machinery (1.2%). These contrasting trends underscore the uneven performance across Germany’s industrial landscape.

Diverging Trends in Domestic and Foreign Orders

Foreign orders experienced a sharp 10.8% decline, with demand from the Eurozone down 3.8% and a significant 14.8% drop from outside the Eurozone. In contrast, domestic orders grew by 3.8%, offering a bright spot amid the overall downturn. This divergence highlights the impact of external demand pressures on Germany’s export-driven economy.

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Broader Trends and Outlook

Excluding large orders, factory orders edged up by 0.2% from October, suggesting a more stable underlying trend. Additionally, in the three months from September to November, new orders were 1.7% higher compared to the preceding three months. While the November data reflects short-term challenges, the broader trends hint at some resilience in Germany’s industrial sector, though uncertainties in global demand remain a concern.