Germany faces growing fears of a winter recession as factory orders and retail sales showed significant declines in November.

Sharp Drop in Factory Orders

Factory orders fell 5.4% in November compared to October, marking a loss of over €50 million. This was the steepest decline since August 2024 and followed a 1.5% drop in October.

The decrease was largely driven by a 58.4% plunge in orders for aircraft, trains, and ships, reversing October’s strong performance. Foreign demand weakened sharply, with orders from outside the eurozone showing the biggest decline. Orders within the eurozone also fell by 3.8%. Key sectors like basic metals (-1.2%) and pharmaceuticals (-7.2%) saw notable drops, along with reduced output for consumer and capital goods.

However, chemical industry orders rose by 1.7%, and machinery orders increased by 1.2%. Domestic orders also grew by 3.8%, while overall orders from September to November were 1.7% higher than in the previous three months.

Retail Sales Add to Economic Concerns

Retail sales in November added to recession fears, falling 0.6% month-on-month, following a 0.4% drop in October. These figures missed analysts’ expectations of a 0.5% increase.

Non-food retail sales declined by 1.8%, while e-commerce and mail orders dropped 1.2%. Food sales saw a slight increase of 0.1%. Year-on-year, retail sales grew by 2.5%, outperforming October’s 2.4% and beating market forecasts of 1.9%.

Bleak Outlook for Recovery

Carsten Brzeski, an ING economist, commented:
“German industry is showing no signs of recovery. At best, it’s stabilizing at a low level.”

He noted that disappointing retail sales suggest private consumption will likely fall in the fourth quarter, following a rebound in the third. Without a strong boost from Christmas shopping, rising inflation, high interest rates, and political uncertainty are expected to hinder economic recovery.

Germany’s economic outlook remains fragile as the country grapples with ongoing challenges in both its industrial and consumer sectors.