According to data released by the German Federal Statistics Office on September 6 local time, after adjusting for seasons and working days, German industrial new orders fell by 11.7% in July from the previous month, the largest decline since May 2020.

Data show that in July, German domestic new orders fell 9.7% month-on-month, foreign new orders fell 12.9% month-on-month, of which new orders from the eurozone fell 24.4% month-on-month, new orders from outside the eurozone fell 4.1% month-on-month.

In addition, Germany’s Federal statistics office revised June industrial new orders growth from 7.0% to 7.6% month-on-month.

The German Federal Ministry of Economic and Climate Protection issued a statement on the same day that the industrial new order data was volatile, and given the bleak business environment and the weak global economy, it is still impossible to judge whether the German industrial economy can continue to recover.

Analysts said orders fell more than expected in July, indicating that Germany’s economic downturn continued into the third quarter. According to the data of the German Federal Statistics Office, the German economy experienced negative growth for two consecutive quarters in the fourth quarter of last year and the first quarter of this year, falling into a technical recession. The German economy was flat in the second quarter compared with the previous quarter. It now looks likely that the economy will continue to stagnate in the third quarter.

IC697CPU772 

Many institutions predict that the risk of a recession in Germany is increasing. The autumn forecast report released by the renowned German think tank Kiel Institute for the World Economy on September 6 said that Germany’s gross domestic product (GDP) will shrink by 0.5% this year, less than the 0.3% contraction predicted in the spring forecast report, and pointed to the weakness of the industrial economy, the sluggish construction industry and the decline in consumer spending are the main reasons for the downward economic forecast. A recent report by the German Institute for Economic Research also forecast a 0.5% decline in GDP this year, saying the German economy was being held back by high interest rates, rising energy prices and weak exports.

Carsten Brzeski, head of macro research at ING, said the German economy is teetering between stagnation and recession, with recent indicators pointing to a poor outlook. Weak purchasing power, declining industrial orders, aggressive monetary tightening, as well as demographic changes, the energy transition and other factors will weigh on the German economy.

A number of recent German economic data have not been positive. On a working day and seasonally adjusted basis, German exports fell 0.9 percent month-on-month to 130.4 billion euros in July, according to the Federal statistics office. The number of Germans out of work rose by 18,000 in August to 2.63 million on a seasonally adjusted basis, taking the jobless rate to 5.7 per cent, more than previously expected, according to the Federal Labour Office. According to the German Institute for Economic Research, the German business climate index came in at 85.7 in August, down from 87.4 in July and also missing market expectations.

At the same time, Germany is actively engaged in “self-rescue” operations. According to DPA, Reuters and other foreign media reports, in order to boost the sluggish economy, the German government recently approved a tax cut plan that will cut corporate taxes by 32 billion euros over four years, including 15% of green investment subsidies.