Germany industrial order backlog hits record high as factory demand stays firm
Germany's industrial order backlog reaches a record high in May, underscoring resilient demand in a manufacturing sector that has faced a prolonged downturn. The stock of outstanding orders rises 1.7% from the previous month, marking the sharpest monthly increase since September 2021.
Highlights
- Germany's industrial order backlog increased 1.7% in May, reaching a record-high 8.9 months of production coverage since the data series began in 2015.
- Mechanical engineering drove backlog growth with a 3.3% monthly rise, while industrial production for May and manufacturing PMI both exceeded expectations.
- Economic caution persists as firms cite higher energy costs and supply bottlenecks, with some shifting production abroad despite the governing coalition's reform efforts.
May backlog growth and production signals
As reported by Reuters, citing Germany's statistics office, the backlog of outstanding industrial orders increases by 1.7% in May from the previous month, lifting order books to their fullest level since the data series began in 2015.The reach of the backlog, which measures how long companies could keep producing at current turnover levels without new orders, rises to 8.9 months in May. The increase is driven mainly by mechanical engineering, where the backlog grows 3.3% from the previous month.
Separate data from the statistics office show German industrial production rises more than expected in May, while S&P Global's manufacturing PMI for June shows output edging up for a sixth consecutive month.
Pressure on German manufacturing outlook
Bethmann HAL bank chief economist Alexander Krueger says elevated order levels matter only if they are converted into actual production. He says companies are likely to remain cautious despite the governing coalition's reform package, citing difficult business conditions and higher energy costs.Krueger also says more companies are shifting production abroad rather than keeping it in Germany. He adds that orders are likely to keep piling up for the time being, partly because renewed tensions in the Middle East are creating supply bottlenecks that hamper production.
In our earlier article on the Farnborough Airshow, we noted how rising geopolitical tensions are pushing defence to the forefront while commercial aerospace continues to face fragile production recoveries. The piece highlighted that, despite solid demand, manufacturers are still constrained by persistent supply-chain bottlenecks and engine shortages—making the ability to deliver and ramp output more important than headline order totals.
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