Germany: Industrial sector remains stagnant – Commerzbank

German Industry Faces Ongoing Challenges

According to Dr. Ralph Solveen, Senior Economist at Commerzbank, the German industrial sector continues to struggle. In January, industrial orders experienced a significant decline, largely due to previous months being artificially boosted by major defense and public-sector contracts. When excluding these large-scale orders, the core measure of new orders remained virtually unchanged, and industrial output also decreased.

Stabilization Without Signs of Growth

January saw a notable 11.1% drop in German industrial orders compared to December, a result anticipated by analysts. This sharp decrease follows inflated figures in November and December, which were driven by several substantial orders.

More critically, the underlying orders—excluding these major contracts—dipped by 0.4%, with December’s numbers also revised downward. This pattern indicates that while the sector has stopped deteriorating, it has not yet begun to recover.

There is still no evidence of a rebound. Industrial production itself fell by 0.5% in January relative to the previous month, reinforcing the view that the sector remains stagnant.

The trajectory of core orders, which leaves out large one-off contracts, will be a key indicator for production trends in the months ahead.

Limited Impact on Economic Growth

Overall, the latest data suggests that German industry is unlikely to provide meaningful support to the country’s economic growth in the first quarter. At most, a modest increase in real GDP might be possible.

This report was produced with assistance from artificial intelligence and subsequently reviewed by an editor.