German industrial orders dropped sharply in March, official data published on May 4 showed, as the Russian invasion of Ukraine hit demand. Incoming orders were down 4.7% on the previous month in March, according to the federal statistics agency Destatis.
“The drop was a “visible” indication of the impact the war in Ukraine is having on the German economy,” the Economy Ministry said in a statement.
"Increased uncertainty is reflected in much more restrained demand, especially from the non-euro area" the Ministry said. Foreign orders from outside the eurozone dived by 13.2% in March, while demand from inside the bloc rose by 5.6%. Domestic orders registered a meek drop of 1.8%.
The largest drop was for capital goods, used by companies in production, which fell 8.3%. “In these politically and economically difficult times, the decrease also shows a growing reluctance to invest,” Destatis said in a statement.
Intermediate goods saw a more modest drop of 1.5% in March, while consumer goods orders went up by 6.4%. "This drop is still far away from the collapse of orders seen at the start of the first pandemic-driven lockdowns in spring 2020," said Carsten Brzeski, head of macro at ING bank.
But "the war in Ukraine and the new supply chain frictions in China will add more pressure to orders and consequently the entire economy in the coming months", he said.
