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EUROPE ECONOMICS: ING Notes First Setback for Germany's Industry

· 02/05/2021 02:20

07:06 AM EST, 02/05/2021 (MT Newswires) -- ING said that while Germany was preparing for a severe spell of winter weather this weekend, Friday's industrial orders data showed that the economy was already severely impacted at the end of December.

Industrial orders data gave a first impression of how the stricter COVID-19 lockdown measures since mid-December had hit the economy, noted the bank. Industrial orders fell by 1.9% month-on-month, from a slightly upwardly revised 2.7% in November.

This was the first drop in industrial orders after seven consecutive monthly increases. The December drop was driven by weaker domestic demand and a sharp drop in orders from eurozone peers, wrote ING.

New orders from outside the eurozone increased slightly. On the year, industrial orders were now up by 6.4%. Industrial orders were still some 2.5% above their pre-crisis level and despite the pandemic, the year 2020 will be the first year since 2017 in which industrial orders recorded a positive year in terms of average monthly growth.

German industry had remained almost unharmed by the November lockdown, added the bank. In fact, the industrial revival since the summer, though coming from very low levels, was the reason why the German economy weathered Q4 much better than most eurozone peers.

Friday's data, however, showed that the stricter lockdown measures since mid-December, as well as the Christmas break, had finally hit German industry, according to ING. At face value, this only looked like a temporary breather.

However, with the Chinese New Year break as well as ongoing lockdowns in many main trading partner countries, setbacks for industry seemed hard to avoid.