German factory orders plummet most since 2020

German factory orders plummet most since 2020

German factory orders plummet most since 2020

German industrial orders suffered their biggest fall in March since 2020, official data showed Friday, fuelling fears that Europe’s biggest economy is entering a sharp downturn.

New orders, which give a foretaste of industrial output, suffered a surprise drop of 10.7 percent compared with the previous month, according to provisional figures from federal statistics authority Destatis. It was the biggest decline since April 2020, when the coronavirus pandemic had just started its march round the world, prompting lockdowns and border closures.

Orders had been rising in recent months, bolstering hopes that Germany had weathered the fallout from the Ukraine war and resulting energy crisis better than feared. But the latest data rang alarm bells anew about the state of the economy, with LBBW bank economist Jens-Oliver Niklasch calling the plunge a warning for investors.

“This figure destroys what had been a good start to the year for German industry, and is a real recession signal,” he said in a research note.

The decline could be seen in most areas of the manufacturing sector, Destatis said. Foreign orders were down by 13.3 percent, and domestic orders by 6.8 percent on the previous month, it said.

But the economy ministry said that new orders had been “very volatile” in recent times, and that key indicators of sentiment were continuing on an upward trend that started late last year. Many economic indicators had started rebounding after falling last year in the wake of Russia’s invasion of Ukraine, lifting hopes that Germany could avoid a recession.

However the picture has been darkening again recently, with the economy narrowly dodging a recession in the first quarter, against expectations for a rebound, while exports also dropped in March.