Third consecutive order increase for German industry

Germany’s industrial companies are getting more and more orders. However, the pace of recovery has slowed noticeably.

German industry is fighting its way out of the crisis.

Dhe order books of German industry filled for the third month in a row in July. Orders grew by 2.8 percent compared to the previous month, as the Federal Statistical Office announced on Friday. In the largest branch of the manufacturing industry, the automotive industry, incoming orders rose by a particularly strong 8.5 percent.

In June there had already been a record growth of a revised 28.8 (previously: 27.9) percent. Nevertheless, the orders are still below the pre-crisis level: Compared to February 2020, the last month before the imposition of the corona restrictions in Germany, incoming orders are still 8.2 percent lower, although in the case of the German auto industry it is “only” still 2.4 percent are.

“After the first upturn in May and the strong recovery in June, the catching-up process for incoming orders in the manufacturing sector slowed down in July,” commented the Federal Ministry of Economics on Friday. “It is likely to continue in the next few months.” This was indicated by the lower number of short-time working hours and the improved business expectations of the entrepreneurs.

“The way to full recovery will remain tough”

Orders from Germany fell by 10.2 percent in July, while those from abroad grew by 14.4 percent. Orders from the euro zone rose by 7.3 percent, those from the rest of the world by 19.2 percent.

Economists surveyed by Reuters in advance had expected a larger increase in orders in August, according to a survey with an average of 5.0 instead of the now reported 2.8 percent. Jens-Oliver Niklasch from Landesbank Baden-Württemberg then called the order numbers “a slight disappointment”. “But you have to say that we caught up pretty well in June,” he says. He would not weight the strong divergence between home and abroad because of the high fluctuations in the numbers.

“But what one should probably see in the coming months: The easily accessible fruits have been harvested, now the economic catch-up will lose momentum. We will not see the pre-crisis levels quite as quickly as one or the other had recently hoped, ”says Niklasch. “The road to full recovery will remain tough,” says Alexander Krüger from Bankhaus Lampe. The industry also remains under pressure because of the ongoing pandemic.

“All in all, we can look forward to the third order increase in a row. Things are moving forward again, ”said Thomas Gitzel, VP Bank’s chief economist. However, despite all the joy, it should not be forgotten that the situation in industry was difficult even before the corona pandemic. “The structural change in the automotive industry is a burden. The machine and system builders can tell you a thing or two about it. The worst pain may have been alleviated, but chronic economic tension will remain in the manufacturing industry for the time being, ”said Gitzel.