More and more orders for German industry

So far, there has been little sign of the partial lockdown in German industry – but the situation remains tense. Above all, the rest of Europe is weak.

There is a strong upward trend in the auto industry.

Dhe recovery of German industry is continuing. As the Federal Statistical Office announced on Thursday, their order intake grew for the fifth month in a row in September. The growth rate weakened to 0.5 percent. However, the value for August was subsequently revised upwards to 4.9 percent. Incoming orders are an important early indicator of economic development in the coming months.

The gap to the pre-crisis level has narrowed further for the industry, at least if you look at its order books. In the spring the order level had plummeted on an index scale from around 103 points to 65 points. Since May things have been on the up again. In September 99.9 points were achieved. The largest branch of the manufacturing industry, the auto industry, has already clearly exceeded the pre-crisis level: The September value is 5.8 percent above the February value.

The good industrial economy is largely borne by foreign countries. This becomes clear when you summarize the development in July, August and September, i.e. the third quarter. The demand from the countries of the euro area was therefore 41 percent higher in the summer quarter than in the spring quarter. 40.4 percent more orders were also received from the rest of the world. Domestic demand, on the other hand, grew noticeably weaker at 15.5 percent.

Investments are on hold

The extent to which German industry will also be affected by the recent partial lockdown remains to be seen. In the spring it suffered significantly from the closed borders and disrupted supply chains. It’s different this time, at least so far. The growth engine China is also buzzing this time. The economist Alexander Krüger from Bankhaus Lampe is therefore optimistic. On the basis of the new order numbers, a new surge is emerging. “The lockdown is unlikely to set the industrial recovery back as it did in the spring,” says Krüger.

From the point of view of Commerzbank economist Ralph Solveen, today’s figures suggest that industry will “at least partially offset” the expected renewed decline in the service sector in the fourth quarter; the German Institute for Economic Research expects a slight decline in economic output in the final quarter as a result of the partial lockdown, while the Institute for the World Economy in Kiel expects a standstill.

At the same time, the situation also remains uncertain for industry. The fact that demand from the euro zone was severely dampened in September and shrank by 6 percent shows that the corona restrictions in neighboring countries are apparently having far-reaching consequences. The fact that the demand for capital goods also fell by 2 percent in September indicates increased uncertainty. Economists have recently pointed out more often that investments are being put on hold in many industries due to the uncertain business development.

In addition, good order numbers do not always convert directly into sales. Real sales in German industry continued to rise in September and were 1.1 percent higher than in the previous month. However, compared to February 2020, the month before the start of the corona restrictions, sales in September were still 8.9 percent lower.