German retail sales drop unexpectedly in November, industrial orders also decline
2025.01.08 06:11
Investing.com — In an unexpected turn, German retail sales fell by 0.6% in real terms in November, despite anticipation of an increase from pre-Christmas promotions like Black Friday and Cyber Monday, according to data released by the federal statistics office. This decline contradicts analyst predictions of a 0.5% rise.
In the larger picture, the retail sector in Germany is estimated to have generated 1.3% more sales in real terms in 2024 than in 2023, as reported by the statistics office. Real sales in 2024 are projected to be 2.6% higher than the pre-pandemic level of 2019.
However, November also saw a decline in German industrial orders, reigniting fears of a potential recession. Industrial orders fell 5.4% from the previous month on a seasonally and calendar adjusted basis, despite analysts predicting no change.
Carsten Brzeski, global head of macro at ING, indicated that weak order books and high inventories do not forecast well for industrial production in the upcoming months. He stated, “German new orders and retail sales data confirm our view of a light winter recession in Germany.”
In November, large-scale transport equipment orders, which had seen a significant increase in October, fell by 58.4%. Excluding these large orders, such as for trains, ships, and aircraft, orders were 0.2% higher than the previous month, according to the statistics office.
The month also saw a 3.8% rise in domestic orders, which failed to offset a 10.8% drop in foreign orders. New orders from the euro zone fell by 3.8% and from other regions by 14.8%.
Commerzbank (ETR:) economist Vincent Stamer noted that a recovery in German manufacturing is “still not in sight”. However, a three-month comparison shows incoming orders between September and November were 1.7% higher than the previous three months.
Brzeski also expressed uncertainty about the upcoming holiday season, stating, “Unless Christmas shopping brings a positive surprise, private consumption is set to drop [in December], and ongoing political and policy uncertainty combined with re-accelerating inflation make any substantial rebound in consumption unlikely.”
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