German industrial orders and retail sales unexpectedly dropped off in November 2024, once again sparking recession fears, as the eurozone’s biggest economy showed minimal growth in the third quarter.
Industrial orders fell by 5.4 percent from October 2024 on a seasonally and calendar-adjusted basis, the federal statistics office in Berlin announced on Jan. 8.
“German new orders and retail sales data confirm our view of a light winter recession in Germany,” he said.
Hefty large-scale transport equipment orders made in October failed to materialize again in November, with new orders in the sector down 58.4 percent.
After discounting large orders such as for trains, ships, and aircraft, orders were 0.2 percent higher than in the previous month, according to the data.
A 3.8 percent rise in monthly domestic orders failed to offset a 10.8 percent drop in those from abroad, with new orders from within the eurozone down 3.8 percent and from further afield plummeting by 14.8 percent.
In a three-month comparison, which is subject to less volatility than monthly figures, incoming orders between September and November were 1.7 percent higher than in the previous three months.
Retail sales declined by 0.6 percent in real terms compared with the previous month, the federal statistics office reported, showing that pre-Christmas promotions such as Black Friday and Cyber Monday failed to stimulate sales.
“Unless Christmas shopping brings a positive surprise, private consumption is set to drop [in December], and ongoing political and policy uncertainty combined with re-accelerating inflation make any substantial rebound in consumption unlikely,” Brzeski said.
The statistics office’s annual estimate showed that the German retail sector generated 1.3 percent more sales in real terms in 2024 than 2023, even though it got off to a slow start, and that real sales for 2024 are expected to be 2.6 percent above pre-pandemic levels.
The drop in sales comes alongside a higher-than-forecast rise in inflation, a double blow for the biggest economy in Europe.
German inflation is expected to have risen by 2.6 percent in December, preliminary data from the statistics office harmonized to compare with other European Union countries showed on Jan. 7.
The nation’s economy has been contracting for the past two years following COVID-19, the war in Ukraine, increased competition from China, and rising energy prices, with the once mighty German motoring industry one of the most notable victims of the decline.
This further bleak economic news comes at the start of an election year, with people set to head to the polls next month after Chancellor Olaf Scholz’s coalition collapsed in November and he lost a confidence vote in December.
The Bundestag was dissolved by President Frank-Walter Steinmeier on Dec. 27 with an election scheduled for Feb. 23.
The campaigning is already underway, with polls currently showing Scholz’s Social Democratic Party behind the conservative Union bloc led by Friedrich Merz.
Scholz’s vice chancellor, Robert Habeck of the Green Party, is also bidding for the top job but is polling behind Merz.
Also making gains is the right-wing Alternative fur Deutschland, led by Alice Weidel.
Current polling indicates that the next government will likely be led by Merz as chancellor in a coalition with at least one other party.
