Commerzbank’s Senior Economist Dr. Ralph Solveen notes that German industry remains weak, with January industrial orders dropping sharply after earlier distortions from big ticket defense and public-sector contracts. The core orders measure excluding large items is essentially flat, and industrial production also fell. The bank concludes that German industry is stabilizing but not yet recovering, limiting first-quarter GDP support.

Industrial orders stabilize without clear recovery

"As expected, German industrial orders fell sharply in January compared with December (-11.1%). This is primarily due to the fact that the results in November and December were distorted upwards by numerous big ticket orders."

"More importantly, the core figure excluding big ticket orders fell by 0.4% and the December figure was also revised downwards. This means that the trend in the core figure continues to move sideways, which suggests that industry has thus stabilized."

"Still, there are no signs of an upturn yet. This is consistent with the fact that Industrial output fell by 0.5% in January compared with the previous month."

"In any case, the core figure excluding large orders is more important for the evolution of production in the coming months."

"All in all, today's figures do not suggest that the industrial sector will support growth in the German economy in the first quarter. At best, a slight increase of real GDP can be expected."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)