German manufacturing orders slump in November
German manufacturing orders unexpectedly slumped in November, according to figures released by Destatis on Wednesday.
Orders fell 1.3% on the month following a 0.2% increase in October, missing expectations of a 0.3% rise. The October figure was revised up from a 0.4% fall.
On the year, manufacturing orders slid 6.5% following a revised 5.6% drop the month before. Analysts had been expecting a 5.5% fall.
Domestic orders rose 1.6% and foreign orders fell 3.1% in November compared to the previous month. New orders from the eurozone were down 3.3%, while new orders from other countries declined 2.8%.
The manufacturers of intermediate goods saw new orders increase 0.2% on the month, while manufacturers of capital goods showed decreases of 2.1%. New orders for consumer goods were unchanged.
ING economist Carsten Brzeski said the sharp fall in November industrial orders shows that a bottoming out of the manufacturing slump is "anything but near".
"The great order book deflation in German industry continues," he said. "In fact, it looks as if 2019 will be the second year in a row in which new orders have fallen. In 2018, orders dropped by 0.4% on average. Currently, 2019 is on track to record a monthly average drop of some 0.6%. Moreover, while 2018 was mainly about weaker foreign orders, the order book deflation reached the domestic economy, with domestic orders dropping faster than foreign orders. To illustrate how unique this long stretch of falling orders is for German industry, the last time German order books shrank for two years in a row was in in 2001 and 2002. Ahead of the Great Recession, order books shrank by 2.9% on average every month in 2008.
"All in all, there are still no signs at all of a bottoming out for German industry. Instead, the free fall continues. In fact, there is simply one word to describe the current state of the German industry: ‘dire’."
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said the data "are still horrible".
"The hefty 0.6 percentage point upward revision of the October headline makes the headline slightly less grim, but these numbers aren’t pretty," he added.