German industry has surprisingly recorded the strongest increase in incoming orders in just over a year and a half. In February, the number of new orders rose by 4.8 percent month-on-month, as the Federal Statistical Office announced on Wednesday in Wiesbaden.
This is the strongest increase since June 2021, and order intake increased for the third month in a row. "Overall, after the weak year-end quarter of 2022, an economic recovery is emerging at the beginning of 2023," the Federal Ministry of Economics said in a statement published at the same time. Nevertheless, bank analysts remained cautious about the further development of the economy.
Surprising recovery
Analysts were surprised by the development of order intake. Although they had expected a further increase for February, they had assumed only a slight increase of 0.3 percent. However, the increase in January was not as strong as previously known. The Federal Office has revised the increase downwards month-on-month, from 1.0 percent to just 0.5 percent.
"Incoming orders continue to recover in many sectors of German industry," the Ministry of Economic Affairs said in a statement. Year-on-year, order intake was also better than expected. In this regard, the Federal Office reported a decline of 5.7 percent, while analysts had expected a minus of 9.3 percent.
In February, domestic orders rose by 5.6 percent month-on-month, the statement said. Foreign orders increased by 4.2 percent. The Federal Office pointed out that major orders made a significant contribution to the positive development of order intake. Excluding major orders, the Ministry of Economic Affairs estimated the increase in order intake at 1.2 percent.
On the other hand, there was a different development in the individual areas of industry. There were renewed growth in the automotive industry and metal production, and more orders were also recorded in areas such as mechanical engineering and the chemical industry. However, orders in the pharmaceutical industry were still declining.
"Even if you exclude the major orders, this was still a decent result," commented analyst Jens-Oliver Niklasch of Landesbank Baden-Württemberg on the data on incoming orders. He spoke of a "strong injection of orders" for the German economy.
Analyst Ralph Solveen from Commerzbank also spoke of a positive surprise from German industry. For the further development, however, he was still skeptical. It is too early to speak of a turn upwards. "This is unlikely to be the beginning of a longer-term recovery in the economy," said Solveen.