Order receipts in manufacturing give cause for concern

German manufacturing sector companies are booking an ever lower number of orders. In May, order receipts dropped 2.2% on April after adjusting for price, calendar and seasonal effects. Compared to May 2018, the decline was as much as 8.6%. The current decrease is attributable to weaker demand from abroad. Domestic orders have, by contrast, tended somewhat more favourably of late.

The weak order receipts are another consequence of the cooling global economy and the effects of the trade dispute between China and the USA. In the longer term, this is shown by both a drop in demand from countries outside the Eurozone and the clearly lesser interest amongst its European neighbours in Germany’s industrial products. Particularly hard hit in this context are the industrial corporations that rely on exports.

In the course of the year to date, order receipts in manufacturing have dwindled by over 5% on the same period last year. This negative trend has affected all the larger segments of German industry, even if some segments of manufacturing have in specific months actually posted better figures temporarily. With a decrease of around 9%, orders in the first five months of this year crunched in particular in mechanical engineering and in companies involved in metal production or metal processing. Manufacturers of IT appliances, electronics and optics were less affected by comparison, with a decline in orders of just under 2%.

Overall there are increased signs that we are not facing a brief economic dip, but that the export-focussed segments of German industry should ramp up to deal with a somewhat more prolonged period of weakness.

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