German industry has made a weak start to the second quarter. Incoming orders fell by 0.4% in April compared to the previous month, as reported by the Federal Statistical Office in Wiesbaden on Tuesday (06/06/2023). The decline follows a slump in March, which at 10.9% was even more pronounced than previously reported. Compared to the same month last year, incoming orders fell by 9.9% in April.

"Following the sharp slump in March, incoming orders were also weak overall at the start of the second quarter," commented the Federal Ministry of Economics in Berlin. However, the order backlog is still at a comparatively high level. "Overall, however, the weak order intake does not yet indicate any short-term growth impetus for industrial production."

In detail, domestic demand rose in April, while foreign demand declined. Orders for capital and consumer goods were both lower than in the previous month. Orders for intermediate goods, on the other hand, increased. Large orders were the main burden. Without this fluctuation-prone component, total orders would have risen by 1.4 percent.

The Ministry of Economic Affairs pointed out that the development was not weak in all areas. The areas of motor vehicles and motor vehicle parts as well as chemical products had recorded growth. In contrast, there were declines in the areas of pharmaceutical products and mechanical engineering.

Economist Ralph Solveen from Commerzbank spoke of difficult times for the industry. Although production is likely to be supported for a few more months by the orders that remained unfilled during the coronavirus pandemic. "However, there is a risk of a significant decline in the second half of the year, which is likely to contribute significantly to the German economy as a whole shrinking in the second half of the year."

VDMA: Weak start to spring

In April, incoming orders in the mechanical and plant engineering sector fell significantly by 20% in real terms compared to the previous year. This reflects the recent deterioration in economic sentiment.

Order books in the mechanical and plant engineering sector are off to a weak start in spring 2023: After March brought a small ray of hope with a drop of 6 percent, orders fell again significantly in April by 20 percent in real terms compared to the previous year, reports the VDMA. Domestic orders fell by 15 percent, while foreign orders shrank by 23 percent (euro countries: minus 21 percent, non-euro countries: minus 24 percent). "This monthly result reflects the recent deterioration in economic sentiment," says VDMA economic expert Olaf Wortmann. "The global economic burdens are still considerable, so that an improvement in incoming orders is unlikely to materialize."

In the less volatile three-month period from February to April 2023, orders fell by 14% in real terms compared to the previous year - both in Germany and abroad. Orders from euro countries fell by 15 percent, while the decline from non-euro countries amounted to 13 percent.