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German industries received 6.9% fewer orders in October than in September, a drop caused by lower foreign interest. The drop in demand follows two consecutive months showing the same trend.
The Federal Ministry of Economics in Berlin has warned that the latest crisis will hurt the country financially.
A spokesperson said: “The second sharp drop in incoming orders in the past three months means another damper on the economic outlook.”
Capital goods such as machinery saw the biggest drop in demand, followed by intermediate goods. Purchases of consumer goods, meanwhile, increased significantly.
The drop in orders in October was mainly caused by a drop in exports – 13.1% less than in September. The decline was particularly marked in trade with non-EU countries, which fell by 18.1%.
The Federal Office attributes this to a 15.6% increase in large orders in September from abroad. Overall, however, exports also fell from August to September, albeit only 0.7%.
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A breakdown of year-on-year trade data shows German exports to the UK plunged 10% to 5.7 billion euros while exports to China fell 0.2% year-on-year to 8.5 billion euros.
Exports to the United States, however, jumped 16.2% over the year, to 10.8 billion euros.
In October, Germany’s economy ministry cut its export growth forecast for the year from 9.2 percent than it had forecast in April to a more modest 8.6 percent.
This has been linked by the government to a “historically unique shortage of intermediate goods” in the manufacturing sector – a sign that disruptions to the global supply chain are a problem even for Europe’s largest economy.
New leaders, from left to right: Robert Habeck, Olaf Scholz and Christian Lindner
Domestic orders, on the other hand, rose 3.4% from September to October. But even so, the significant drop in exports in recent months is hampering Germany’s economic recovery.
Olaf Scholz, who is due to be sworn in as German Chancellor on Wednesday, will be busy working on a battered economy.
The drop in factory orders is on top of a housing crisis and, naturally, the coronavirus pandemic.
In their campaign, the Social Democrats pledged to make housing affordable once and for all.
The capital Berlin has seen its rents double on average over the past decade, and the analysis of the cost of living calculator Numbeo shows that incomes have not increased accordingly.
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Housing is a key area of work for the new German coalition government
Residents have thus had to devote a greater part of their income to housing, and less remains for other types of consumption and savings.
Mr Scholz’s new government has pledged to build 400,000 new homes every year, 100,000 of which will be subsidized by the state.
That’s 50,000 more than the current target, and about 100,000 more than the construction industry has been able to build to date.
While the deal reached by the German traffic light coalition means a fourfold increase in the number of citizens receiving subsidies, for Scholz’s cabinet it is a difficult undertaking.
How to materialize it is one of the first tasks with which Social Democrats, Greens and Free Democrats can prove that their alliance works.
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COVID-19, of course, will also be a top priority.
The new government plans to make vaccinations mandatory for people working in hospitals, nursing homes and other doctor’s offices from March 16.
In addition, Mr Scholz said last week that he supported a mandatory diet. He said: “As a delegate I would definitely vote for it, to make it very clear.”
Protests in response to renewed closures in recent weeks portend divisive reactions to any further coronavirus measures.
To help fight Covid, the nation will count on the help of epidemiologist Karl Lauterbach, who over the past two years has become a source of knowledge for Germans regarding the science behind the pandemic.
A doctor with two doctorates and a professorship, his appointment did not come as a big surprise.
Announcing him as the new Minister of Health, Mr Scholz said during the presentation of the Social Democratic ministerial candidates in Berlin on Tuesday: “Most citizens wanted the next Minister of Health to be someone from the field. , someone who can do the job very well, and someone called Karl Lauterbach. “
“He will be.”