Poor German Industrial Data Piles Pressure on Merz

German industrial production and orders fell far more than expected in January, data showed Monday, piling pressure on Chancellor Friedrich Merz to revive Europe's top economy.

Production ticked down 0.5 percent, federal statistics office Destatis said, compared to a rise of 0.9 percent expected in a poll of analysts by financial data firm FactSet.

Industrial orders meanwhile plunged 11.1 percent, a far bigger fall than the 5.2-percent decline expected in a FactSet analyst poll.

"These numbers are a clear disappointment," said economist Dirk Schumacher of public lender KfW.

"The simultaneous slump in order intake indicates that the upturn has so far left industry behind."

A series of brighter data releases since the start of the year had boosted hopes that German industry -- struggling with weak demand, US tariffs, high energy costs and fierce Chinese competition -- could be turning a corner.

But today's figures underline just how fragile any recovery is, making grim reading for Merz, who has made boosting Germany's flatlining economy his top priority.

Increased government spending on defence and other sectors was helping some sectors, Schumacher said, but there was little evidence this was sparking a widespread recovery.

"There are certain areas, such as the defence sector, which are developing very dynamically," he said. "However, this is not enough to trigger a broad upturn in industry."

Germany's economy has barely grown since 2022 following a burst of pent-up demand after the Covid pandemic. In January, the government lowered its growth forecast for 2026 to one percent.

AFP/RSS