Headline: Unexpected Drop in Retail Sales in Germany as November Sees Decline in Industrial Orders
Investing.com -- In an unexpected development, according to data released by the federal statistics office, retail sales in Germany fell by 0.6% in real terms in November. This decline occurred despite expected increases from pre-Christmas promotions like Black Friday and Cyber Monday. Analysts had predicted a 0.5% increase.
From a broader perspective, the statistics office's report forecasts that Germany's retail sector will achieve 1.3% more sales in real terms in 2024 compared to 2023. Real sales in 2024 are anticipated to be 2.6% higher than the pre-pandemic levels of 2019.
However, German industrial orders also declined in November, rekindling fears of a potential recession. Industrial orders, which analysts did not expect to change, decreased by 5.4% compared to the previous month on a seasonally and calendar-adjusted basis.
Carsten Brzeski, ING's global macro head, noted that weak order books and high inventories do not provide a positive outlook for industrial production in the coming months. Brzeski stated, "Germany's new orders and retail sales data confirm our view that there will be a mild winter recession in Germany."
In November, large-scale transportation equipment orders, which saw a significant increase in October, dropped by 58.4%. According to the statistics office, excluding large orders such as trains, ships, and airplanes, orders were 0.2% higher than the previous month.
In the same month, domestic orders increased by 3.8%, but this increase could not offset the 10.8% decline in foreign orders. New orders from the Eurozone fell by 3.8%, while orders from other regions decreased by 14.8%.
Vincent Stamer, an economist at Commerzbank, indicated that a recovery in the German manufacturing sector is "still not in sight." However, a three-month comparison shows that incoming orders from September to November were 1.7% higher than in the previous three months.
Brzeski also expressed uncertainty about the upcoming holiday season, stating, "Unless Christmas shopping brings a positive surprise, private consumption is expected to decline [in December], and ongoing political and policy uncertainty, along with resurgent inflation, makes a significant recovery in consumption unlikely."