German factory orders rose unexpectedly in January on rising aircraft demand

New orders for German factories rose for the second month in a row in January, boosted by volatility in aircraft orders, but the outlook for the country’s manufacturing sector remains clouded by rapidly rising interest rates.

Price-adjusted data from Germany’s statistical agency Destatis released on Tuesday showed manufacturing orders rose 1% month-on-month in January, beating the 1% decline economists had expected in a Wall Street Journal poll. I was.

Orders in December increased by a revised 3.4% from a previously estimated increase of 3.2%.

The increase in orders in January was driven by foreign orders, which increased by 5.5% month-on-month. Of these, orders from the Eurozone fell 2.9%, while orders from the rest of the world surged 11.2%.

According to Destatis, the increase in orders from non-Eurozone countries is mainly due to large orders in the aircraft and spacecraft construction sector. The sector saw a 138.5% increase in orders over the month.

On the other hand, domestic orders decreased by 5.3% from the previous month.

Activity in Germany’s main manufacturing sector slowed through 2022 as high energy prices and weak demand hit production. Stabilizing energy prices and easing supply chain bottlenecks should support output, but rising interest rates are likely to weigh on the energy sector as a further drag, economists said.

New orders at German factories continued to decline across all major industry groups in February, according to data from the Purchasing Managers Survey, amid reports that firms were about to run out of stocks of inputs. , especially in the intermediate goods category.

Please contact Xavier Fontdegloria (xavier.fontdegloria@wsj.com).

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