German factory orders slump as foreign demand plummets

German factory orders plummeted in October as demand for investment goods declined, putting the economy on weak footing in the final months of the year. 

Orders fell 6.9% following a 1.3% increase the previous month. That’s the biggest drop in the volatile index since August and a worse reading than predicted by a single economist in a survey of 23 conducted by Bloomberg.

Germany’s industry-focused economy is being hit by a squeeze on material and transportation, rising inflationary pressures and a new wave of Covid-19 infections. Those factors could slow the rebound, which still is below pre-crisis levels, according to the OECD. 

Companies are facing unprecedented delivery times for inputs and a majority of manufacturers plan to raise prices, according to Ifo, which has seen its business climate index fall for five consecutive months.

Orders for investment goods recorded a disproportionate drop of almost 11%, driven by a slump of orders from outside the euro area. 

“The second sharp decline in orders within the last three months has put a further damper on the economic outlook,” Germany’s Economy Ministry said in a statement.