FX.co ★ Germany sees decline in machinery and equipment amidst economic headwinds

The Federal Statistical Office of Germany (Destatis) has reported a notable downturn in the country's machinery and equipment production, which declined by 13.5% in October. This represents a significant plunge compared to the more favorable figures seen in September, highlighting a potential hiccup in Europe's economic powerhouse. Indeed, Germany needs to ramp up its efforts and rejuvenate its production capabilities. Europe’s stalled economic engine could have broader implications, hindering overall output. Meanwhile, experts observed a 3.7% decrease in Germany's production orders in October, defying the expected 0.2% increase, while the decline was sector-specific. Notably, new orders in the transportation equipment sector, including aircraft, ships, and trains, surged by 20.2%. However, this silver lining is overshadowed by the struggles in the machinery industry, which dampen the impact of the transportation sector's growth. Analysts interpret these trends as signs of a tepid national economic recovery following the challenges posed by the energy crisis. A particular concern is the German automotive industry, currently grappling with a global demand slump, especially from China – one of Germany's key trading partners. Given this backdrop, projections suggest a further 0.1% quarterly decline in German production by the end of December. Previously, Destatis noted production decreases in several key German economic sectors. As of November, end-of-quarter figures for 2023 indicated a 3.8% year-on-year decline in manufacturing. Similar issues were evident in the energy supply sector. Compounding these challenges, total German exports are estimated to have fallen by 3.8% year-on-year in the July to September period of 2023.