German Factory Orders Surge in December, Offering Glimmer of Hope for Ailing Economy
Germany's industrial sector delivered a surprising and robust rebound at the end of last year, with factory orders surging at their fastest pace since late 2021. The strong data, released Thursday by the federal statistics office Destatis, provides a rare piece of encouraging news for Europe's largest economy, which has been grappling with prolonged stagnation.
Preliminary figures show new orders—a closely watched leading indicator for manufacturing activity—jumped by 7.8% in December compared to November, which had already seen a solid 5.7% increase. This performance dramatically outpaced the modest 1.0% growth anticipated by analysts in a FactSet survey.
The surge was partly driven by a handful of large-scale orders, a typically volatile component. However, even excluding these major contracts, orders still grew by a respectable 0.9% month-on-month, suggesting broader underlying demand. The recovery was led by the metal products sector, where orders skyrocketed by over 30%, alongside significant gains for machinery, equipment, and computer and electronic products.
"The data points to a potential trend reversal that has been long awaited," said Jens-Oliver Niklasch, senior economist at LBBW. "For the first time in a long time, we have concrete reason for cautious confidence regarding the industrial outlook."
The report will likely offer some political respite to Chancellor Friedrich Merz, whose government has faced mounting pressure over the pace of the economic recovery. His administration has launched targeted public spending initiatives in defense and infrastructure, aiming to stimulate growth. The government's official forecast projects the economy to expand by 1.0% this year.
Not all sectors shared in the December boom. Orders continued to decline in the automotive industry and in the broader category of "other transport equipment," which includes aerospace, shipbuilding, and rail. The mixed picture underscores the uneven challenges facing German industry, which has been weighed down by high energy costs, subdued global demand—particularly from China—and international trade tensions.
Demand was strong both at home and abroad. Domestic orders rose by more than 10%, while foreign orders increased by 5.6%, indicating a tentative pickup in international appetite for German goods.
Reaction & Analysis:
Klara Schmidt, Economic Analyst at Frankfurt Trust: "This is a very welcome surprise, but we must be careful not to declare victory too soon. One strong month doesn't make a trend. We need to see if this momentum sustains into the first quarter, especially without the boost from big-ticket orders."
David Chen, Portfolio Manager, Global Macro Fund: "The numbers are unequivocally positive. The breadth beyond large orders is key. Strength in metals and machinery suggests capital investment cycles might be turning, which is crucial for medium-term growth. This could signal the bottom for German manufacturing."
Markus Weber, Small Business Owner (Metal Fabrication): "Finally, some good news! We've seen a noticeable uptick in inquiries since November. Maybe the talk of a turnaround is real. It feels like the fog is slowly lifting."
Anna Berger, Union Representative (Automotive Sector): "A 'glimmer of hope'? Spare me. While some sectors party, our plants are still facing cutbacks. This 'recovery' is lopsided and built on shaky ground. The government's piecemeal approach is failing whole industries and their workers. Celebrating now is premature and tone-deaf."