Eurozone demand slump hits German industrial orders

New orders at German industrial firms slid in December, official data showed Thursday, driven entirely by plunging demand from the country’s eurozone neighbours.

Overall, new business for manufacturing firms fell back 2.1 percent month-on-month in seasonally-adjusted figures, statistics authority Destatis said, disappointing analysts who had foreseen a 0.6 percent lift.

A breakdown of the data showed that while domestic orders rose by 1.4 percent and those from non-eurozone countries gained 2.1 percent, eurozone demand tumbled 13.9 percent.

“Incoming orders have progressed more weakly in the past months, marked by developments in the capital goods sector,” the economy ministry in Berlin said in a statement, adding that volatile large orders for items such as aircraft had had a particularly large impact in December.

Looking forward, while  “confidence among businesses has recently improved, overall the outlook for industrial growth remains muted,” the ministry added.

Looking at sector-by-sector figures, makers of capital goods and consumer goods both reported falls of almost four percent in new orders in December, while producer goods makers added 1.4 percent.

Compared to December 2018, the volume of new industrial orders was 8.7 percent lower.

“2019 was not only the worst year for industrial orders since 2008, it was also the first time since 2002 that German order books shrank for two years in a row,” ING bank economist Carsten Brzeski said.

Meanwhile the spread of the coronavirus may nip in the bud hopes of a rebound based on the easing of US-China trade tensions, he added.

“No matter how the spread of the virus to Europe will evolve, the sheer impact on the Chinese economy will be enough to affect German industry,” Brzeski said, pronouncing the short-time outlook for the sector  “dire”.