German new orders dropped in December, bringing a bittersweet end to a rather disappointing year for the German industry. New orders dropped by 0.7% MoM, from an increase of 1.5% MoM in November. On the year, new orders were down by 2.7%. The last months have not been easy for the German industry. Since May, new orders have dropped in five out of eight months. Interestingly, the December drop was driven by falling domestic demand. The increase in foreign orders by 0.6% MoM gives hope that the export channel will not totally dry out in the coming months.
Looking ahead, product expectations have come down significantly since the summer. At the same time, inventories have increased and order books have narrowed. A combination which does not bode well for production in the coming months. More generally speaking, the German industry is still standing on shaky grounds. While the industry had been able to stomach the cooling of the Chinese economy, the slowdown of emerging markets, the euro crisis and geopolitical risks, it now seems as if extremely low oil prices and the slowdown of the US economy are simply two risks too much.