Germany industrial orders in decline for 6 month
The German economy is staggering so much so that the demand for industrial items is declining to near-historic lows.
Germany's industrial orders have been taking on a downward trend for the sixth consecutive month, official data showed Tuesday, which suggests that recession is looming on the horizon of the biggest economy in Europe.
Fresh orders dipped by 1.1% month on month, the federal statistics agency Destatis said in a statement. This marks a 13.6% year-on-year decrease when orders were particularly soaring due to the economy emerging from the COVID-19 lockdown and the industry springing back into action.
The German industry, which mostly relies on export, has taken several hits, especially with the Ukraine war that increased the strain on supply chains and caused several hikes in energy prices.
"Shrinking order books add to current recession fears. With surging energy prices and fading new orders, the outlook for the German industry is anything but rosy," ING economist Carsten Brzeski said on the issue.
Demand has been in decline for months in Germany and the rest of Europe alike, with German orders decreasing by 4.5% and the eurozone following suit by 6.4% in July. Meanwhile, the economies outside the eurozone witnessed an uptick of 6.5%.
Germany's economy saw practically no growth over the course of the few past months, with the national GDP growing barely 0.1%.
As the German economy struggles, Russia's decision to suspend the operation of its Nord Stream 1 pipeline has given rise to fear about the prospects for gas prices as the European economy has taken one hit after the other due to the Western sanctions on Moscow.
Gas supplies via Nord Stream have completely stopped since August 31 and the operation of the pipeline has been suspended due to scheduled maintenance work at the Portovaya compressor station, data from gas transportation system operators showed.
Thirteen EU nations have either ceased getting Russian gas entirely or are only receiving a portion of it due to the temporary blockage of the Nord Stream pipeline 1, the Russian TASS news agency reported last week.
The Nord Stream 1 pipeline is highly significant for Europe. Running through the Baltic Sea to Germany, the gas pipeline supplied around a third of the Russian gas exports to Europe. Before its shutdown for maintenance last week, the pipeline was running at 20% of its capacity.
Surging costs of power linked to gas prices have already stunted the production of various industries, such as fertilizers and aluminum manufacturers, and prompted EU governments, such as Germany, to increase their spending by billions in order to help their citizens.
Italy and Germany are now the two largest European countries most exposed to a gas supply shock due to their extensive use of natural gas and significant reliance on Russia, according to S&P Global Ratings.
About 60% of Germany's natural gas supply was piped in from Russia in 2020, primarily under long-term contracts.