German industrial orders fall as Ukraine war dampens investment

BERLIN, May 5 (Reuters) – German industrial orders fell more than expected in March, driven mainly by a reduction in orders from abroad as the war in Ukrainehit manufacturing demand in Europe’s biggest economy, data showed on Thursday.

Orders for industrial goods dropped 4.7% on the month in seasonally adjusted terms after an upwardly revised decline of 0.8% in February, figures from the Federal Statistical Office showed.

The March figure was the sharpest monthly fall since October 2021, the office said. A Reuters poll of analysts had pointed to a drop of 1.1%.

Foreign orders decreased by 6.7% in March on the previous month, the office reported.

“The German economy is programmed for a downturn,” said Thomas Gitzel, chief economist at VP Bank, pointing to a plunge in exports in March as well.

“The war in Ukraine, the supply chain problems and high rates of inflation are spoiling companies’ appetite for investment. Incoming orders are suffering from this,” he said, adding that a recession was becoming increasingly likely.

“As before, the industry is not suffering from a lack of orders but from faltering supply chains,” Alexander Krueger of Hauck Aufhäuser Lampe Privatbank said.

“The longer the Ukraine war lasts, the more order cancellations will follow. The wellbeing of the sector is ultimately dependent on energy deliveries continuing,” he warned.

(Reporting by Rachel More, Editing by Miranda Murray and Madeline Chambers)