German Industrial Orders Plunge 10.6% in August

German industrial orders fell significantly more than expected in August, driven by a sharp decline in large-scale transportation orders following unusually strong demand in the previous month.

New factory orders dropped 10.6% from July on a seasonally and calendar-adjusted basis, Germany’s federal statistics office reported on Tuesday. The decline was substantially worse than the 1.0% decrease forecast in a Reuters poll of analysts.

The steep fall was entirely linked to the “other transport equipment” category, which includes aircraft, ships, railway rolling stock and military vehicles. Orders in the sector plunged 61.5% in August after more than doubling in July due to an exceptionally large volume of major contracts.

Excluding large-scale orders, the underlying picture for Germany’s industrial sector was considerably more stable. New orders edged down just 0.1% from the previous month.

A less volatile three-month comparison also showed greater resilience. Industrial orders between June and August were 1.3% higher than during the previous three-month period, suggesting the headline August decline was heavily distorted by volatile big-ticket contracts.

Germany’s statistics office also revised its July figures upward. Industrial orders increased 3.2% in July compared with June, stronger than the preliminary estimate of 2.5%.

Weakness in August was recorded across both domestic and international demand. Foreign orders fell 5.4% month over month, with orders from euro zone countries also declining 5.4%. Demand from countries outside the euro zone decreased 5.5%.

Domestic demand recorded an even sharper contraction, with German industrial orders from within the country plunging 17.3% from July.

The latest factory orders data highlight continued volatility in Germany’s manufacturing sector, particularly in industries where large contracts for aircraft, ships, trains and military equipment can significantly influence monthly figures.