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German Factory Orders Jump 1.8% Better Than Anticipated in January

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A yellow forklift raises a big red arrow up. Growth in production rates and development of industry and infrastructure. Increased sales, economy growth. Concept of increase, growth and success.

German factory orders rose for the third consecutive month, supported by foreign demand, even as the pandemic pushed Europe’s largest economy close to another recession.

Source: Federal Statistical Office

DAX down -3.39%, EUR USD down -0.89%

Orders increased 1.8% from the prior month in January after increasing by 2.8% in December. Volumes now top pre-pandemic levels.

Even though the improvement in orders bodes well for Germany’s rebound in upcoming months, the economy is likely to have plunged into its second recession since the Covid-19 pandemic started.

The impact of Russia’s invasion into Ukraine presents a new challenge, with Germany being heavily dependent on Russian natural gas imports than other European states. Rising energy costs could weigh largely on its manufacturing sector.

Inflation continues to present a major challenge, rising 5.5% in February, driven by increasing energy costs that could intensify due to Russia’s invasion.

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