German industrial orders witnessed an unexpected surge in December, recording the highest increase month-on-month in over three years due to an exceptionally high volume of aircraft orders, as reported by the federal statistics office on Tuesday. On a seasonally calendar adjusted basis, orders increased by 8.9 per cent from the previous month, marking the most significant rise since June 2020. Despite analysts' expectations in a Reuters poll for industrial orders to stay flat, the actual figures showed growth. The category of other vehicle construction, which includes aircraft, ships, and trains, saw a substantial boost due to plane orders, with a monthly order increase of 110.9 per cent. Large orders in metal products and electrical equipment manufacturing boosted the overall results. However, the Ifo Institute highlighted that the German economy is increasingly burdened by a manufacturing order deficit. Despite Tuesday's data, this issue persists, economists warned. Commerzbank's senior economist, Ralph Solveen, noted that the high volume of large orders had minimal short-term production impact. Excluding these, order volume actually dropped by 2.2 per cent. "This shows once again that a turn for the better is not in sight for the German economy," Solveen said. Key sectors such as the automotive industry saw a drop in incoming orders of 14.7 per cent, with mechanical engineering and the chemical industry experiencing decreases of 5.3 per cent and 3.7 per cent, respectively, according to the statistics office. However, industrial orders from October to December 2023 showed a slight increase of 0.1 per cent compared to the previous three months. In December, domestic and foreign orders grew by 9.4 per cent and 8.5 per cent, respectively, with a significant 34.5 per cent increase in orders from the euro zone and a 7.5 per cent decrease from outside the euro zone. Overall, the calendar-adjusted industrial orders for 2023 fell by 5.9 per cent compared to the previous year.
