Industrial orders drop sharply in Germany as ECB hikes rates
When you look persistently for the crisis, you can eventually find it, and we see the first signs of it. Factory orders in Germany fell sharply by 10.7% in March 2023, reversing the trend from a downwardly revised 4.5% increase in February, and far exceeding expectations for a decline by 2.2%. This is the largest decline in industrial orders since the height of the coronavirus pandemic in April 2020. The decline was led by a 47.4% contraction in miscellaneous vehicle-building orders, which includes shipbuilding , rail vehicles, aircraft, spacecraft and military vehicles, after surging 55% in February. Excluding large-scale orders, there was a 7.7% decline in March. Orders for motor vehicles and motor vehicle parts also suffered a significant drop, equal to 12.2%, while orders for capital goods fell by 14.1% and those for intermediate goods by 7.5%. Consumer goods orders instead increased by 1.2%. Orders from abroad dropped by 13.3%, those from the euro area by 10.8%, while domestic orders contracted by 6.8%. Here is the related graph
The drop is the strongest if we exclude the covid period. The decrease affecting other means of transport is interesting, as if to signal that the flame for the production of military vehicles for Ukraine does not exist, or has already run out. The auto sector, Germany's flagship, is also suffering greatly. They only keep consumer goods, for now,
Given that these data are not bad enough, the ECB has seen fit to follow the FED and tighten interest rates by a quarter point. Such an expected and predictable move that we didn't even comment on it…
Of course, inflation is high, but we know that it is imported, due to causes linked to energy factors, while core inflation remains low. It seems that either the ECB wants to punish consumption only to reduce the demand for energy, an incredibly painful operation from a social point of view, or that it doesn't know what to do in reality and limits itself to making economic ammunia. Meanwhile, high rates are driving down the assets of commercial banks and increasing insolvencies, waiting for the banking crisis to pass on this side of the ocean.
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The article Sharp fall in industrial orders in Germany, as the ECB raises rates comes from Scenari Economics .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/brusco-calo-degli-ordini-industriali-in-germania-mentre-la-bce-aumenta-i-tassi/ on Fri, 05 May 2023 09:00:09 +0000.