Manufacturing Sector Sees Slump in Orders in October, Reports Suggest
October brought a notable shift to the manufacturing sector, with reports revealing a decrease in orders. This was a stark contrast to the September increase, as the Federal Statistical Office disclosed a 3.7% drop month-on-month and a dramatic 7.3% fall year-on-year. When comparing the last three months, orders from August to October showed a 4.6% decrease compared to the previous period.
Analysts' findings, shared on a Wednesday, pointed to overseas orders as the primary cause of this downturn. Foreign orders fell by 7.6%, while domestic orders slightly increased by 2.4%. The manufacturing sector's overall slump can be largely attributed to mechanical engineering, where orders plummeted by 13.5%. Other industries, such as the metal sector and automotive sector, also contributed negatively to the result.
The manufacturers' woes extended beyond orders, with the real turnover in the manufacturing industry suffering a 0.5% decline month-on-month in October, representing a 2.1% decrease year-on-year.
Sebastian Dullien, Director of the Institute for Macroeconomics and Business Cycle Research (IMK) at the Hans Böckler Foundation, highlighted the "persisting weakness of the German manufacturing industry." He suggested that a recovery of the industrial economy was not imminent.
Additional Insights:
The decline in manufacturing orders in the U.S. was primarily driven by domestic factors in October 2024, particularly in the transportation sector and durable goods industries. Key contributors to the decline included a 7.4% decrease in orders for transportation goods and a 2.2% decline in durable goods orders. Specific drops were observed in transportation equipment, furniture and related products, and primary metals.
Manufacturing output also took a hit, falling 0.5% in October 2024, partly due to a 10% drop in motor vehicle and parts output as a result of strikes. These domestic factors had a significant impact on the decline in factory orders in October 2024.
The significant decrease in manufacturing sector orders globally in October 2024 can be attributed to several factors, including the automotive industry's notable decline, global economic uncertainties, and changes in global trade dynamics. Domestic orders showed mixed trends, with some sectors experiencing increases, while foreign orders were also impacted, with the euro area showing a slight increase and the rest of the world experiencing a decline. Specific data highlights the decline in automotive production and the mixed performance of different sectors in both domestic and foreign markets.
