(Bloomberg) -- German factory orders dropped the most in three months, highlighting industry’s woes just weeks before Chancellor Olaf Scholz faces elections.
Demand fell 5.4% in November from the previous month, far worse than the 0.2% decline economists had predicted in a Bloomberg survey. That’s due to a drop in large-scale orders. Stripping out that element, the gauge would have increased by 0.2%, the statistics office said.
“Without the large orders, at least there are indiciations of a bottoming out at a low level,” said Vincent Stamer, an economist at Commerzbank. “There’s still no sign of the situation in German industry recovering.”
The country’s manufacturing sector has been weighing on the broader economy since 2022, with cyclical issues increasingly giving way to structural problems such as worker shortages and lofty energy costs. The economy probably contracted for a second year in 2024 and the Bundesbank is predicting a rebound of just 0.2% this year.
That weakness is a focus in Feb. 23 elections, which will likely see Scholz ousted in favor of Friedrich Merz, who leads the main opposition conservative CDU/CSU bloc.
The Social Democrat’s term that started in 2021 has been marred by a number of issues including the pandemic, a cost-of-living crisis following Russia’s war in Ukraine and weak Chinese demand for German products.
A new chancellor will face similar growth hurdles, with the threat of US tariffs — once Donald Trump returns to the White House later this month — adding to the challenges for Europe’s biggest economy.
A first estimate for fourth-quarter output is scheduled for Jan. 15. Economists currently predict an expansion of just 0.1% in the period, though the Bundesbank has warned that a stagnation looks likely.
--With assistance from Kristian Siedenburg and Barbara Sladkowska.
(Updates with economist comment in third paragraph)
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