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
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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.