Germany Faces Growing Risk of Winter Recession Amid Manufacturing Slump

Germany faces a potential winter recession. Manufacturing orders dropped 5.4% in November. This marks the steepest decline since August 2024. A 58.4% fall in aircraft, train, and ship orders drove the downturn. Foreign demand declined, especially outside the eurozone. Eurozone demand also dipped by 3.8%.

Retail Sales Fall Short of Expectations, Deepening Economic Uncertainty

The slump extended across industries. Basic metal orders fell 1.2%. Pharmaceuticals declined 7.2%. Consumer and capital goods saw weaker output. Industrial activity slowed. Chemical industry orders rose 1.7%. Machinery orders increased 1.2%. The overall trend remains bleak. Concerns about Germany’s industrial base persist. Retail sales fell 0.6% month-on-month. Analysts expected 0.5% growth. Non-food retail sales dropped 1.8%. Mail order and e-commerce sales decreased 1.2%. Food sector sales rose 0.1%. Year-on-year retail sales increased 2.5%. November’s performance adds to consumer confidence concerns.

Weak Economic Indicators Point to a Challenging Winter Ahead

Germany’s economy is under pressure. Weak consumer sentiment drags down growth. A winter recession is increasingly likely. GDP figures release on January 15. This will determine if Germany enters a recession. Economist Brzeski sees no clear recovery sign. The third quarter’s private consumption rebound is unlikely to continue. Inflation pressures and political uncertainty persist. Short-term economic recovery is unlikely.