German economy falters as industrial orders plunge in August
The German economy has encountered yet another setback. Industrial orders in August declined by 5.8 per cent compared to July, a far greater drop than anticipated. Economists warn of a potential recession and remain sceptical about a swift recovery. This represents yet another negative signal from across the Oder.
According to the latest figures from the German Federal Statistical Office, industrial orders steeply declined in August. Compared to July, orders fell by 5.8 percent, marking the largest decrease since January this year. Experts had predicted a much smaller reduction of only 2 percent. This significant drop exacerbates the crisis in a pivotal sector of the German economy.
Jens-Oliver Niklasch, an expert from LBBW, quoted by German media, is unequivocal that this new data is ominous. Leading indicators are falling, forecasts are lowered, and bad news continues. Everything points to a recession, he informed. Jörg Krämer, chief economist of Commerzbank, describes the data as "a bitter disappointment" and predicts, at best, the gross domestic product stagnation in the year's second half.
Significant decline in domestic orders
Particularly troubling is the fact that domestic orders plummeted by 10.9 percent. Foreign orders also decreased, although to a lesser extent, by 2.2 percent. Within the eurozone countries, there was a decline of 10.5 percent, while orders from other countries increased by 3.4 percent.
The German Ministry of Economy notes that a significant recovery in industrial activity in the second half of 2024 is unlikely due to continued weak demand and deteriorating business sentiment. Experts highlight that the current situation is a clear signal of a crisis.
Key industrial sectors hit by the crisis
Sebastian Dullien, scientific director of the IMK Institute, highlights that the crisis impacts three key sectors of the German industry: automotive, machinery manufacturing and chemicals are significantly affected by this phase of weakening, he assesses.
The IMK Institute forecasts stagnation in the gross domestic product this year and a growth rate of only 0.7 percent next year.
Experts stress that the deepening crisis in the industry poses a serious risk even to these modest forecasts. They argue that the federal government's expectations of economic growth exceeding 1 per cent in 2025 seem unrealistic in light of the current data.
