German Factory Orders Rise in Boon for Pandemic-Stricken Economy

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German factory orders rose in November, giving the economy cause for optimism after another quarter that was characterized by record numbers of Covid-19 infections. 

Demand increase 3.7% after declining a revised 5.8% in the previous month. Orders from abroad helped drive that increase, while domestic demand fell.  

Germany’s rebound is under threat from persistent supply-chain problems, inflationary pressures including an energy crunch and high infection numbers. The government recently tightened restrictions to brace for a new outbreak caused by the highly contagious omicron variant. 

Auto sales in the country fell to the lowest level since at least 1990 last year as the industry grappled with shortages of semiconductors. Manufacturers from Volkswagen AG to Stellantis NV are hoping the squeeze will gradually ease this year but have warned supply will remain tight in the first half.

IHS Markit has pointed to “tentative signs” that the constraints eased in December, based on a poll of German purchasing managers. Companies are also sitting on historically high backlogs of work that can fuel the recovery when bottlenecks are resolved. 

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