German factory orders jump on 87% surge in big transport items

[BERLIN] German factory orders surged in October, supporting the prospect that Europe’s biggest economy eked out growth in the final quarter of the year. 

Demand increased 1.5 per cent from the previous month, which was revised significantly higher to show a 2 per cent gain, the Federal Statistical Office said on Friday (Dec 5). The result was much more than the 0.3 per cent median estimate in a Bloomberg survey. 

The improvement was driven by large-scale orders – in particular a 87 per cent jump in the transport category that includes aircraft, ships, trains and military vehicles, the statistics office said. 

The numbers contrast with a more mixed picture of late. While factory orders and industrial output offered hope for stabilisation in September, S&P Global’s gauge of manufacturing activity in November fell further below the 50 threshold separating expansion from contraction.

A revival in the sector is seen as crucial to overcoming weakness that saw gross domestic product contract in 2023 and 2024. Germany’s problems stem from steeper US tariffs, rising competition from China and longer-standing issues like too much red tape.

GDP stagnated in the third quarter, with the country only narrowly dodging a recession. The Bundesbank and most other forecasters expect output to expand again in the final three months of the year, with the economy gaining momentum thanks to higher government spending and interest-rate cuts by the European Central Bank.

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Makers of everything from cars to steel to chemicals face “a dramatic low point” as the year draws to a close, however, according to Peter Leibinger, president of the influential BDI business lobby. 

“The economy is in free fall, but the government is not responding decisively enough,” he warned this week.

Indeed, after seven months in office Chancellor Friedrich Merz’s unwieldy ruling alliance with the Social Democrats is wobbling over a controversial pension overhaul. BLOOMBERG