German factory orders fall sharply in January, production likely to have stagnated

Orders received by German industry plunged sharply in the month of January. After the considerable growth recorded in incoming orders in the second half of last year, order intake fell 3.9 percent sequentially. Moreover, the growth for December has been downwardly revised by nearly one percentage point. In some cases, the considerable fall is linked to a decline in orders in the “Other Transport” category segment, which is always quite volatile. However, even after excluding this segment, orders in January were 3.2 percent below the previous month.

Seasonal adjustment problems might be an explanation for this, noted Commerzbank in a research report. After all, activity is strongly influenced by the situation of the public holidays in January, which seasonal adjustment cannot always correct fully.

Therefore, there should be a counter-movement in February. But today’s figures also imply that the solid rise in new orders in recent months had probably outstripped the underlying trend. The momentum is expected to be a bit less dynamic in the months ahead. But, there is no end in sight to the upswing. Production in January is also likely to be a bit disappointing, stated Commerzbank. Sales have dropped a bit, which implies that production is likely to stagnate. But it is expected to rise again in the months ahead, added Commerzbank.

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