German factory orders recover in September but slower than expected

Berlin (dpa) – Germany factory orders recovered in September, but at a slower-than-expected pace, figures from Destatis revealed on Thursday.

New orders grew 1.3 per cent month-on-month in September, reversing an 8.8-per-cent decrease in August. However, this was slower than growth of 1.8 per cent expected by analysts.

The decline in August was sharper than earlier reported, coming in at a drop of 8.8 per cent. Destatis had earlier reported a fall of 7.7 per cent.

Domestic orders were down 5.9 per cent in September on the previous month. Meanwhile, foreign orders rose 6.3 per cent. The rise in foreign orders was attributable to countries outside the eurozone, while orders within the currency bloc fell back.

Destatis noted a divergence between investment and consumer goods. Orders for investment goods rose, while demand for intermediate and consumer goods fell.

Mechanical engineering orders rose strongest, by as much as 12.2 per cent. The rise in the automotive sector came in at 9.6 per cent, after a sharp fall in August.

Reporting separately, Germany’s Mechanical Engineering Association (VDMA) said demand for the country’s machinery was booming, with price-adjusted orders up 36 per cent over the first nine months compared with same period last year.

September saw a rise of 65 per cent, driven by orders for large plants. Foreign orders almost doubled in this month, while domestic orders rose by 3 per cent.

While orders for large items had skewed the numbers, even without this exceptional factor, orders were still up around a fifth on last year, VDMA analyst Olaf Wortmann said.

But the VDMA also stressed concerns regarding the supply bottlenecks being experienced throughout the German economy. This meant delays between incoming orders and actual turnover.

The VDMA recently upped its production forecast for 2021 to a rise in real terms of 10 per cent over last year. The rise could have been larger, but for the supply problems, it said.