Germany’s economic troubles deepened in November as factory orders and retail sales declined, raising concerns of a winter recession.
Factory Orders See Sharpest Drop in Over a Year
Factory orders in November fell by 5.4% compared to October, translating to a loss of over €50 million. This marked the steepest decline since August 2024, following a 1.5% drop in the previous month.
The decline was primarily driven by a 58.4% plunge in orders for aircraft, trains, and ships, a stark reversal from October’s strong performance. Demand from outside the eurozone fell sharply, while orders within the eurozone dropped 3.8%. Key sectors such as basic metals (-1.2%) and pharmaceuticals (-7.2%) also reported declines, along with weaker output for consumer and capital goods.
However, some sectors showed growth: chemical industry orders rose 1.7%, and machinery orders increased by 1.2%. Domestic orders improved by 3.8%, with total orders from September to November 1.7% higher than in the previous three months.
Retail Sales and Consumer Sentiment Falter
The risk of a winter recession grew as retail sales data showed further economic strain. November retail sales dropped 0.6% month-on-month, worse than October’s 0.4% decline and below the expected 0.5% growth.
Non-food retail sales fell 1.8%, while e-commerce and mail orders dropped 1.2%. Food sales provided a minor boost, inching up 0.1%. Year-on-year, retail sales rose 2.5%, exceeding October’s 2.4% and market forecasts of 1.9%.
Uncertain Recovery Ahead
Carsten Brzeski, an ING economist, warned:
“There’s no clear recovery trend in sight for German industry. At best, it’s stabilizing at a low level.”
He added that weak retail sales suggest private consumption is unlikely to sustain its third-quarter rebound. Without a significant boost from Christmas shopping, ongoing inflation, high interest rates, and political uncertainty will likely hinder any substantial recovery.
Germany’s economic performance in the coming months will be crucial as the country faces mounting pressures in both its industrial and consumer sectors.