Germany’s industrial sector has started weakly into the New Year.
As latest numbers by the Federal Statistical Office published today show, order intake dropped by 11 per cent in January compared to December 2025 – the biggest monthly drop in two years.
Economists had expected a decline of only 4.5 per cent.
The decrease is mainly due to fewer large-scale orders. Those are orders with a value of at least 5 per cent of the total annual turnover of the company that reports the order.
The sectors most affected by the decreased order flow were metal products (minus 39 per cent), mechanical engineering (minus 13 per cent) and primary metals (minus 15 per cent). Conversely, automotive companies and other vehicle manufacturers reported 10 per cent more orders.
Many economists are suprised by the numbers.
Alexander Krüger, head economist at private bank Hauck Aufhäuser Lampe, told Welt today: “The decline was expected, but the extent came as a shock.”
Jens Niklasch, senior economist at Landesbank Baden-Württmeberg, wrote in LBBW magazine today: “The figures are not for the faint-hearted. A significant decline in order intake had been widely anticipated due to the strong performance in previous months.
“However, the fact that the decline is in double digits comes as a bitter disappointment.”
In addition to the weak orders, German industrial production dropped as well in January, decreasing 0.5 per cent month-on-month and 1.2 per cent compared to a year ago.
Michael Herzum, chief economist at Union Investment, was more optimistic, telling e-fundreserach.com that the decrease was caused primarily by the “volatile” large-scale orders and that the order books of German industrial companies were so full that they could produce for eight months at full capacity without a single additional order.
“If the currently high oil prices remain a transitory phenomenon we do not have to worry about German industry this year,” he added.
Experts are warning that the energy price shock amid the escalating Iran war may be highly detrimental for Germany’s economy.
Samina Sultan, a trade economist at think-tank IW Köln, told broadcaster ntv today that an oil price of $150 (€129) per barrel would cost Germany’s economy 0.5 per cent of growth in 2026 and 1.3 per cent in 2027.
She added: “Germany would lose more than €80 billion in two years. This would hit the already fragile economic recovery hard.”
